Iraq just wrote off $256M of Mozambique’s oil debt... thoughts

Discussion
1

Mozambique had a massive oil debt to Iraq going all the way back to the late 70s and 80s. Iraq has now forgiven $256 million of it, but Mozambique still has to pay back the remaining $64 million over the next 15 years, starting in 2029.

This seems like a huge relief for Mozambique, but they are still struggling with debt overall. Do you guys think this will actually help their financial situation, or is it just a drop in the ocean?

2

That’s a long time to be carrying a debt. Feels like Iraq just finally decided to move on from it.

3

Bali said:
That’s a long time to be carrying a debt. Feels like Iraq just finally decided to move on from it.

Yeah, I doubt they were expecting Mozambique to actually pay it back after all these years. Just clearing old accounts.

4

$64M over 15 years sounds manageable, but Mozambique’s economy is in bad shape. Wonder if they’ll even be able to keep up with those payments.

5

Kiran said:
$64M over 15 years sounds manageable, but Mozambique’s economy is in bad shape. Wonder if they’ll even be able to keep up with those payments.

Good point. If they’re already struggling with debt, what’s another long-term payment going to do?

6

Why did they owe Iraq so much in the first place? Was it just old oil deals?

7

Crosby said:
Why did they owe Iraq so much in the first place? Was it just old oil deals?

Yeah, looks like it was from oil supply agreements back in 1979 and 1980. Just one of those debts that never really got settled until now.

8

So basically, Mozambique got a discount but still has to pay. Could be worse, I guess?

9

Graydon said:
So basically, Mozambique got a discount but still has to pay. Could be worse, I guess?

Exactly. It’s not a total wipeout, but at least they don’t have to worry about the bigger chunk anymore.

10

This makes me wonder how many other old debts like this are still floating around between countries.

11

Dorian said:
This makes me wonder how many other old debts like this are still floating around between countries.

Probably a lot. Some of these debts just sit there for decades until they either get forgiven or renegotiated.