Mozambique and Angola deepen economic and cultural cooperation
Mozambique tells creditors debt levels “unsustainable”
10:41 CAT | 25 Oct 2016
Reuters / A fisherman cleans his boat beneath Maputo"s skyline, in this picture taken August 15, 2015.
Mozambique’s debt levels are unsustainable and the government must renegotiate repayment terms if it is to agree a new aid deal with the IMF by early next year, the finance ministry told creditors on Tuesday.
The International Monetary Fund suspended assistance to Mozambique earlier this year when evidence of $2 billion in secret loans emerged and has insisted on external scrutiny as a condition for resuming financial aid to one of the world’s poorest countries.
The debt crisis and aid suspension has hit Mozambique hard, with its metical currency depreciating by around 70 percent since January and economic growth expected to slip to 3.7 percent this year, from 6.6 percent in 2015.
Gross government debt could reach 130 percent of gross domestic product (GDP) by the end of the year and financing the budget is set to be an issue in the short to medium term, the finance ministry said in a presentation to creditors seen by Reuters.
“Mozambique’s primary objective is to resume relations with the IMF in order to stabilise the economy and restore confidence of the international community,” the document said.
“IMF discussions can only resume if Mozambique is no longer in ‘debt distress’ category, which entails putting the government of Mozambique’s public and publicly guaranteed debt on a sustainable path.”
Mozambique wants to agree a debt restructure plan with creditors by December so it can be implemented in January in time to resume talks with the IMF, the document showed.
President Filipe Nyusi met IMF Managing Director Christine Lagarde in Washington last month, where they agreed on an independent international audit.
Mozambique’s economic growth prospects and government revenues streams are expected to get a boost longer term when offshore gas reserves begin to be exported, possibly by 2021 if projects are not further delayed.
Italian oil firm Eni is leading an $8 billion floating Liquefied Natural Gas (LNG) export project off Mozambique, while U.S. company Anadarko is planning a $12 billion onshore LNG processing facility.
The central bank lifted its main lending rate by 600 basis points to 23.25 percent last week in an effort to stabilise the metical and tame inflation which hit 22 percent in August.
Source: Reuters
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