China Eximbank provides RMB 308.8 million government concessional loan for Palace of Justice Construction Project

Project narrative

On February 8, 2007, China Eximbank and the Government of Mozambique signed an RMB 308,800,000 government concessional loan (GCL) agreement for the Palace of Justice Construction Project. The borrowing terms of the loan included a 20-year maturity, a 5-year grace period, and a 2% interest rate. Its first scheduled principal payment date is September 21, 2013 and its last scheduled principal payment (maturity) date was March 21, 2028. The loan's (principal) amount outstanding was $19,522,256 as of December 31, 2022. The project involved the construction of the Palace of Justice Office Complex, which includes a 12 story building for the Public Prosecutor's Office, Ministry of Justice, Supreme Court of Appeal, National Anti-Corruption Bureau, and Criminal Steering Committee. China National Complete Equipment Import and Export Corporation (COMPLANT) and the Mozambican CCM Company were the contractors responsible for implementation. A formal groundbreaking ceremony took place on August 22, 2008. However, construction did not begin until November 1, 2008. The project was originally expected to be finished within 24 months. However, it was ultimately completed and handed over to the authorities on October 28, 2010. A formal project completion ceremony took place on February 10, 2011. There are some indications that the China Eximbank loan for the Palace of Justice 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).