Government negotiating extending debt moratoria into 2022 with Cabo Verde, Mozambique, Sao Tome

The Portuguese government is negotiating with Cabo Verde, Mozambique and Sao Tome and Principe the extension of the moratorium on debt payments and on state guarantees to 2022, a source from the executive told Lusa.

“Portugal confirmed this week the extension until the end of this year of the moratorium on bilateral debt and on state guarantees for loans,” said the source from the Ministry of Foreign Affairs (MFA), adding that the same process is being negotiated for 2022, and is therefore not yet concluded.

At issue is the debt that Cabo Verde, Mozambique and Sao Tome and Principe have contracted with the Portuguese state, but also with banks, including Caixa Geral de Depósitos, which are considered private loans with state guarantees, and which have a different legal framework from loans granted State-to-State.

On Tuesday, the MFA announced it had renewed debt moratoria for Cabo Verde, Mozambique and Sao Tome and Principe, totalling €131 million, in response to requests made by these countries, according to a statement.

The measure falls under the “Debt Service Suspension Initiative ([DSSI]” launched by the Paris Club and the G20 in 2020 to mobilise all bilateral creditors, official and private, to support the most vulnerable partner countries in responding to the health and socio-economic crisis arising from the pandemic.

The Paris Club and the G20 had meanwhile announced they had extended moratoria for 25 low-income countries, including these three Portuguese-speaking countries, until April 2022, encouraging countries that do not belong to these two groups of more developed nations to adopt similar measures in dealing with bilateral debt.