On Tuesday 5 July, the Executive Secretary of the Economic Commission of the United Nations for Africa, Carlos Lopes, said that Mozambique would have to address the problem of debt in a “faster and more spectacular” way to beat the current adverse economic environment.
“Mozambique will have to solve the problem of debt in a faster and more spectacular way, and this will not be possible without restructuring a portion of the debt”, Lopes told reporters at the end of a meeting with the Mozambican Prime Minister, Carlos Agostinho do Rosário.
The solution to the debt problem, Lopes continued, would necessitate direct negotiations involving government, the state enterprises that benefited from substantial undeclared loans, and creditors.
“This is one of the short-term remedies. It is clear that the metical will suffer. In fact, it is already suffering, not least because of volatility affecting the currencies of developing countries”, Lopes said.
Stressing that Mozambique had a promising future and good performance in terms of economic growth, Lopes urged domestic resource mobilisation as an engine of development for the country and the continent as a whole.
“A number of measures that will allow the restoration of the indicators necessary for recovery are in order. I think that Mozambique can do it”, he said.
Lopes said Africa needs to invest in better management of debt, central bank reserves, immigrant remittances and people’s savings as resources for growth. The IMF and donors to this year’s State Budget suspended their support after the revelation of the existence of US$1.4-billion in loans guaranteed by the government to state companies which were not declared in the public accounts.
With the revelation of the new loans, Mozambique’s public debt is now set at US$11.66-billion. This represents over 70% of GDP and reflects a debt climbing since 2012, when it was fixed at 42%.
At the end of the visit of an IMF mission to Maputo, on Friday 24 June, the institution said that Mozambique faces difficult economic challenges and that it is expected that economic growth in 2016 will reduce to 4.5%, against 6.6% in 2015, almost 3.3 percentage points below historical levels, with a substantial risk of lowering in this projection.
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