Business Insights
Jubileesouth
Business Insights
  • Home
  • Developmental Effects of Debt Relief
  • About
  • Contact
  • Campaign
  • Resources
  • Debt
  • economics
  • IMF

Debt Crisis in Mozambique

  • November 15, 2016
  • arnold

The government of Mozambique has issued a stark warning to it’s creditors warning that a debt restructure was essential in order for the country to recover.  It revealed last week that the country would simply be unable to repay or even fully service it’s loans until the gas revenues it was expecting was available sometime after 2021.

proxy for Netflix

It’s a grim picture for the South Eastern African nation – which expects public debt to reach an unsustainable level of 130% of GDP by the end of this year.  The International Monetary Fund has offered it’s assistance in negotiating new terms with it’s creditors however direct aid was suspended after they discovered hidden loans of over $2 billion which were not declared.

As hidden debts go this was pretty spectacular, most of it had been built up by various state firms primarily to purchase various security and military equipment.  These were ironically supposedly needed to protect the purchase from a previous secret loan which was used to buy a Tuna fishing fleet.  All of these purchases and loans were kept secret from both investors and creditors alike.

The total of Mozambique’s debt doesn’t sound that much in the context of some Western countries but the total of almost $10 billion is way outside Mozambique’s ability to service.  It is estimated that the country is able to manage a maximum repayment schedule of about $25 million a year, unfortunately it’s current liabilities require repayments of around $38 million dollars every single month.

Many analysts have previously promoted Mozambique as one of the safest investment opportunities in Africa for a variety or reasons.  It’s politically very stable and has some good mineral reserves particularly a large amount of natural gas.   The country had been experiencing some good growth levels however violent clashes in the North and the worldwide drop in commodity prices have stalled both inward investment levels and the overall economic growth which does still stand at about 3.7% however.

The debt crisis though threatens to halt the economic progress being made in Mozambique.  Much of the country has benefited greatly from both the growth and the political stability.  You’ll see a new professional middle class emerge in the cities, who purchase luxury good and utilize the improving internet infrastructure.  Large media firms like Hulu and Netflix are available there although you’ll need a working Netflix VPN to access properly.

It’s a worrying time for the citizens of this beautiful African country, once more the promise of a better life and economy has been threatened by reckless mismanagement by the State. Hopefully the debt can be restructured in some way in order to allow the country to continue it’s growth story.

Related posts:

  1. International Debt Burden of Africa
  2. South African Cryptocurrency Debts
  3. Americans Start Borrowing Again
  4. Netflix – Debt and a Risky Business Model
Related Topics
  • African Debt
  • mozambique
arnold

Previous Article
  • Debt
  • economics

US Debt Heading One Way

  • November 15, 2016
  • arnold
Read More
Next Article
  • Debt
  • economics

Debt Worries in Tanzania

  • December 28, 2016
  • arnold
Read More
Jubileesouth
A Better Life

Input your search keywords and press Enter.