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Mozambique seeks cancellation of government guarantees on Proindicus debt in London court - PM

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JOHANNESBURG (Reuters) – Mozambique is seeking the cancellation of government guarantees on debts run up by state-run security firm Proindicus which helped spark a debt crisis in the country, its prime minister was quoted as saying on Wednesday.

Mozambique has a case in London’s High Court against investment bank Credit Suisse and a number of other parties linked with the $2 billion (£1.5 billion) worth of loans, which have sparked investigations in the United States and Mozambique.

Court filings say the case relates to “commercial contracts”, but give no further details.

Mozambique state news agency AIM said Prime Minister Carlos Agostinho da Rosario told the Mozambican parliament that Maputo had approached the London court to attempt to cancel the sovereign guarantee associated with the debt.

The prime minister was answering questions on the debts tabled by an opposition party, in particular whether Mozambique would continue restructuring the debts and whether it would pay them, the news agency said.

Credit Suisse did not immediately provide a comment. Representatives for a group of Mozambique’s bond holders did not immediately respond to emailed requests for comment.

The loans, which were not disclosed to donors like the International Monetary Fund, spurred donors to cut off support when they were disclosed in 2016, triggering a currency collapse and a default on Mozambique’s sovereign debt.

The southern African country is still struggling to recover from the ensuing debt crisis.

(Reporting by Emma Rumney; Editing by Mark Heinrich)

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