Three ways to understand the meaning of US$2.3 bn in Mozambique – by Joseph Hanlon

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Three ways to understand the meaning of US$2.3 bn in Mozambique – by Joseph Hanlon

2:23 CAT | 24 May 2016

A child clasps a Mozambique flag in a suburb on the outskirt of the capital Maputo in this file picture taken November 2009. At Bobole, a bustling refreshment stop on Mozambique's north-south highway, brightly-painted kiosks lined with bottles offer drinks to thirsty travellers while hawkers sell bananas, paw-paws and carrots in a typical African roadside scene. But memories remain fresh of when Bobole lay in the "death corridor" of a civil war that cost nearly one million Mozambicans their lives until it ended two decades ago. In 2013 a series of hit-and-run raids by opposition Renamo gunmen about 600 km (375 miles) further north has rekindled fears of a return to all-out conflict in what has become one of Africa's economic growth stars. To match Insight MOZAMBIQUE-POLITICS/ REUTERS/Mike Hutchings/Files (MOZAMBIQUE - Tags: SOCIETY POLITICS BUSINESS CIVIL UNREST)

Finance Minister Adriano Maleiane told parliament that the government debt and guarantees total $11.64 billion, of which $9.84 bn is foreign (hard currency) debt and $1.8 bn is domestic (Meticais) debt. So total debt is 107% of GDP and the foreign debt is 90% of GDP – both considered very high.

The estimate of the government guaranteed loans taken in secret in 2013-4 is about $2.3 billion. This is a huge amount of money. It can be visualised in three ways:

It is $80 for each woman, man and child in Mozambique. The median rural cash income is below $25 per person per year – so for half the rural population, it would take their entire cash income for more than three years to pay their share of the debt.
$2.3 bn is exactly Mozambique’s entire tax revenue in 2015.
$2.3 bn is the wage bill for two years for everyone working for the government – ministers, directors, nurses, teachers, cleaners, drivers, etc.

Source: News reports & clippings