June 9, 2016 / 6:01 PM / 3 years ago

Mozambique says statement on finance minister sacking was false

Mozambique President Filipe Nyusi speaks to media during a news conference with German Chancellor Angela Merkel (unseen) after their meeting at the Chancellery in Berlin, Germany, April 19, 2016. REUTERS/Hannibal Hanschke

MAPUTO (Reuters) - Mozambique’s presidency said on Thursday that a statement about the sacking of Finance Minister Adriano Maleiane, who has been at the center of two weeks of negotiations over a delayed $178 million loan repayment, was incorrect.

“The statement sent to the press was false,” Estefanio Muholove, the spokesman for President Filipe Nyusi, told Reuters.

State-owned Mozambique Asset Management (MAM) missed the repayment on May 23. Since then Maleiane has been leading discussions with Russia’s VTB Bank to try to resolve the outstanding payment on the $535 million loan.

He told parliament this week that Mozambique Asset Management was looking at restructuring the loan, updating business plans or bringing in strategic partners to try to avoid a default.

The loan from VTB was taken out to finance shipyards in Maputo and the northern town of Pemba in expectation of a rapid takeoff in the offshore gas sector.

Delays to gas projects and at least $1.35 billion in secret government borrowing have created a foreign debt burden that has plunged one of the world’s poorest countries into economic crisis.

Mozambique is taking immediate steps to cut planned public expenditures this year by 10 percent, Maleiane said, according to the state news agency.

Reporting by Manuel Mucari, Writing by Ed Cropley; Editing by Andrew Roche, Toni Reinhold

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