Announcement of Grant Helps Mozambique Reduce Debt Burden on June 14, 1991

FOR IMMEDIATE RELEASE iWorld Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. *Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 91/S34 Contact: Mary Lou Ingram Tel: (202) 473-4619 GRANT HELPS MOZAMBIQUE REDUCE DEBT BURDEN WASHINGTON, June 14, 1991 -- Mozambique will reduce its debt to commercial banks through a "buyback" program being supported by a $10 million grant from a special facility set up in 1990 to support debt-reduction programs in highly indebted poor countries that have undertaken actions to reform their economies. The facility is funded partially from World Bank income from fiscal 1989, which ended June 30, 1990. The grant will enable the government to buy back $308 million in debt from commercial banks at a 90 percent discount. Completion of the deal will depend on participation by commercial lenders holding at least 60 percent of Mozambique's commercial-bank debt. Additional debt-reduction support totaling as much as $12.9 million is likely to be provided to Mozambique by Sweden, Switzerland, the Netherlands and France. With an average per capita income of about $80, Mozambique is one of the world's poorest countries. It is, in relative terms, also one of the world's most heavily indebted countries. As of 1989, Mozambique's total debt to commercial and official lenders, such as governments and multilateral development banks, totaled more than $4 billion. Reducing the country's commercial-bank debt is expected to help the country move ahead with programs to privatize public enterprises, attract foreign investment, and begin restoring its creditworthiness in the international capital markets. IA