China Eximbank provides RMB 450 million government concessional loan for Presidential Office Building Construction Project

Project narrative

In 2007, the Chinese Government announced that it would fund and construct a new presidential palace in Maputo. Then, on September 13, 2013, the Government of Mozambique signed an RMB 450 million ($71,851,152) government concessional loan (GCL) agreement with China Eximbank for the Presidential Office Building Construction Project. The loan carries the following borrowing terms: a 20 year maturity, a 7 year grace period, and a 1.5% interest rate. Its first scheduled principal payment date is March 21, 2021 and its last scheduled principal payment (maturity) date was March 21, 2033. The loan's (principal) amount outstanding was $55,167,569 as of December 31, 2022. The purpose of the project was to construct a Presidential Office Building in Maputo. Anhui Foreign Economic Construction Group (AFECC) was the contractor responsible for project implementation. It built the two-story complex in 18 months. On January 24, 2014, Mozambique's President Armando Guebuza inaugurated the new, Chinese-built presidential office complex in the capital city of Maputo. There are some indications that the China Eximbank loan for the Presidential Office Building Construction 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).