Fitch lowers Mozambique

Fitch Ratings said it downgraded Mozambique's long-term foreign- and local-currency issuer default ratings to CC from CCC.

The agency also said it affirmed the country ceiling at B- and short-term issuer default rating at C.

The downgrade indicates that a default of some kind appears probable, Fitch said.

The country’s disclosure of hidden public debt has revealed significant short-term repayment obligations, which could precipitate a near-term credit event, the agency said.

Mozambique's fiscal and external positions will continue to deteriorate due to the decision of donors and multi-lateral organizations to halt programmed budget support until the debt debacle is resolved, Fitch said.

Although the government could tap reserves to pay for the upcoming amortizations, this would put severe strains on reserves and could add to external and foreign-exchange pressures, the agency said.

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