China Eximbank provides RMB 150 million government concessional loan for Fixed Telephone Network Coverage Expansion Project

Project narrative

On September 16, 2010, the Government of Mozambique signed an RMB 150 million (about $21.4 million) government concessional loan (GCL) agreement with China Eximbank for the Fixed Telephone Network Coverage Expansion Project. The loan carries a 20 year maturity period and 5 year grace period. Its interest rate is unknown. Its first scheduled principal payment date is March 21, 2016 and its last scheduled principal payment (maturity) date was February 21, 2031. The loan's (principal) amount outstanding was $11,847,711 as of December 31, 2022. The project involved the expansion of the landline telephone (voice and internet) services to 42 districts. It also sought to extend the country’s fiber optic network to three provincial capitals: Tete, Pemba and Lichinga. Huawei was the contractor responsible for implementation. Its work was overseen by Telecomunicações de Moçambique (TDM), the only fixed-line telephone operator in Mozambique. This project reached the implementation stage, but it unclear whether and when it reached completion. There are some indications that the China Eximbank loan for the Fixed Telephone Network Coverage Expansion Project may have financially underperformed vis-a-vis the original expectations of the lender. In 2016, several credit rating agencies downgraded the Government of Mozambique to 'selective default' or 'restricted default' status, and the World Bank and the IMF re-classified Mozambique's external debt as 'in distress.' In January 2017, the Government of Mozambique defaulted on a coupon payment for its dollar-denominated Eurobond. Then, in February 2018, the International Monetary Fund (IMF) announced that the Government of Mozambique had accumulated $710 million in arrears to external creditors and had agreed to reschedule some bilateral debt service payments with the Chinese Government. Two months later, in April 2018, Stelia Neta, a National Director at the Ministry of Finance of Mozambique revealed that the Government of Mozambique’s outstanding debt obligations to the Chinese Government amounted to $2.02 billion and the Chinese Government had agreed to extend the grace periods (and first principal repayments) on these outstanding debt obligations without changing their final maturity dates or interest rates (as captured via Record ID#66283).