The International Monetary Fund said it has suspended lending to Mozambique after determining that the African country had violated terms of its borrowing arrangement with the IMF by failing to disclose more than $1 billion in other loans.
The IMF said it had stopped a $55 million loan disbursement to Mozambique after it became aware of the unreported loans made by Credit Suisse Group AG and VTB Group of Russia, The Wall Street Journal reported on Saturday.
The IMF approved in December a $283 million rescue loan package for Mozambique. The agreement with the IMF requires the southern African country to fully disclose all borrowings and to meet regularly with the multilateral agency to provide updates on its progress.
A Credit Suisse spokesman declined to comment. VTB and Mozambique officials couldn’t be immediately reached to comment.
The IMF’s announcement could cause some investors to steer clear of the country. Many rely heavily on information from the IMF when deciding whether or not to invest in developing countries such as Mozambique.
Antoinette Sayeh, the director of the IMF’s Africa department, said the organization investigated Mozambique’s borrowing after an April 3 report in The Wall Street Journal, which detailed how Mozambique borrowed hundreds of millions of dollars through previously undisclosed loans from the banks.