Iraq has pardoned more than US$256 million of a long-standing debt owed by Mozambique for fuel imports, Mozambican authorities announced on Wednesday.
According to a joint statement from Mozambique’s Ministries of Finance and of Planning and Development, the two countries recently negotiated an 80 percent reduction in the debt, which dates back more than four decades.
The original debt of US$60.3 million was contracted in 1979 and 1980 when Mozambique, under its first president Samora Machel sought oil on favourable terms from several North African and Middle Eastern countries, including Iraq.
At the time, Mozambique’s fuel needs had surged due to the war of destabilisation waged by South Africa’s apartheid regime.
The debt continued accumulating interest, growing to over US$320 million by the time of the recent negotiations.
Mozambican and Iraqi officials met in the United Arab Emirates last week where they agreed on the debt reduction.
As a result, Iraq forgave US$256.1 million, leaving Mozambique responsible for only 20 percent of the outstanding balance.
It was agreed that the remaining amount would be repaid over a 15-year period, following a four-year grace period, meaning the debt is expected to be fully settled by 2043.
This agreement marks a significant financial relief for Mozambique, which has been grappling with economic challenges, including debt burdens and the impacts of natural disasters and insurgent attacks in its northern regions.
The deal also strengthens diplomatic and economic ties between Mozambique and Iraq.
JN/APA