Mozambique has reached an out-of-court agreement to relieve the burden of undeclared "hidden" debts with three European banks, the Minister of Economy and Finance, Max Tonela, said on Monday.

As he explained, the agreement with VTB Plc, VTB Bank Europe and Portugal's BCP requires each of the parties to drop their claims in the case, which has been before the London Court since February 2019. This also excludes Privinvest and its now deceased patron, Iskandar Safa.

In this dispute, the Mozambican state had a capital and interest liability of 1.4 billion dollars which, with the agreement, fell to 220 million US dollars. Without the agreement, the interest would have led to an accumulation of the amount, in addition to the costs of the lawsuit already calculated at 50 million pounds and the ongoing costs of lawyers.

Previously, in October 2023, the state reached an out-of-court agreement with Credit Suisse and local banks to pay off the hidden debts.

Thus, "a total of 2.3 billion (one billion) US dollars of contingent debt in this process will disappear from the state's accounts with the implementation of the two out-of-court settlements reached".

It should be remembered that Mozambique has contracted debts worth more than 2.7 billion US dollars without parliamentary approval. The same would be for the viability of Mozambique Asset Management (MAM), Empresa Moçambicana de Atum (EMATUM) and ProIndicus.

The 220 million dollars now owed are related to the amount owed by MAM and EMATUM.

According to the Minister, the best strategy to put an end to the dispute was an out-of-court settlement due to the uncertainties of the court decision which, in the short and medium term, would bring possible unsustainable consequences for the country.

"The agreement does not affect ongoing actions aimed at holding natural and legal persons, both national and foreign, criminally responsible, whose unlawful acts resulted in the contraction of undeclared debts (hidden debts) and the issuance of the corresponding guarantees, including the right of recourse," noted Max Tonela.

However, the London Court will still read out the sentence on July 17th.