A young Mozambican fisherman makes his way back to the shore with his sail after a day of fishing in Palma. 

Maputo – Mozambique can’t afford to pay debts that were contracted under questionable terms, and creditors to the country must agree on some form of restructuring, central bank Governor Rogerio Zandamela said.

The government had hoped to sort out its foreign commercial debt by January, but a group of investors holding its 2023 Eurobond, which went into default at the start of the year, has refused to start formal negotiations until authorities publish an audit of the hidden loans.

The discovery of the undisclosed loans worth about $1.4 billion prompted the International Monetary Fund to suspend aid to Mozambique in 2016.

“The biggest problem we have are these new loans, new debts, undisclosed, that came last year,” Zandamela said on Sunday at a conference in Estoril, near Portugal’s capital Lisbon.

“There is a discussion about whether we should pay, because they were illegal or not, but the reality is that we can’t pay at this point in time.” Negotiations were taking place in London, he said.

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“Not a single traditional donor is going to put in a penny," he said.