European Union: Exports to Mozambique fell 23% in debt crisis year

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European Union: Exports to Mozambique fell 23% in debt crisis year

12:11 CAT | 29 Nov 2017

Macauhub (File photo) / For illustration purposes only

Exports of goods and services from the European Union to Mozambique fell 23 percent to 681 million Euros last year, worsening Mozambique’s negative balance of trade with Europe to 644 million Euros.

According to data from the European Union’s official statistics agency Eurostat, the export of EU goods and services to Mozambique fell from 982 million euros in 2015 to 681.6 million Euros.

Exports of Mozambican products to Europe have remained relatively stable since 2014, at 1.3 billion Euros that year, 1.4 billion in 2105 and 1.3 billion Euros last year.

After a rise from 894 million in 2014 to 982 million in 2015, last year European exports to Mozambique fell to 681.6 million euros, leaving the trade balance with its highest deficit since 2014.

Mozambique has since last year faced a financial crisis as a result of state-guaranteed loans taken on by state-owned companies exponentially increasing ratio of public debt vis-à-vis the country’s wealth.

The deterioration in public accounts has led to a sharp economic slowdown, a cut in international donor aid to the state budget and the downgrading of the country’s credit rating to default at the end of last year.

A report by the African Development Bank, the Organisation for Economic Co-operation and Development and the United Nations on ‘African Economic Perspectives’ issued in May warns that the Mozambican government has to respond to internal pressure, improve governance and ensure fiscal consolidation in order to revive economic growth.

“A credible fiscal consolidation perspective is crucial to ensuring debt sustainability, based on trade debt restructuring,” the report released in Ahmedabad, India, says.

“The necessary political determination will face internal resistance, particularly when dealing with issues of governance and accountability, and in resolving political-military conflict,” the statement adds

According to the experts, Mozambican growth slowed to 4.3 percent last year, but will recover to 5.5 percent this year and rise to 6.8 percent next year.

“A recovery in coal and electricity exports, coupled with the foreseeable start of an offshore natural gas project,” will be the main building blocks of Mozambican growth, which will however remain below the average of recent years.

With the theme ‘Investing in Youth for a Sustainable Future’, the fifth EU/Africa summit will take place between 29 and 30 November in Abidjan, the economic capital of Côte d’Ivoire. It will bring together about 80 heads of state and government of European and African countries

The first EU-Africa summit took place in Cairo (Egypt) in 2000, and was promoted by Portugal during the Portuguese presidency of the Council of the European Union. In 2007, again under the aegis of the Portuguese presidency, Lisbon hosted the second edition of these summits.

Source: Lusa