Mozambique’s economy grew by 3.3 percent in 2016 - Official

APA-Maputo (Mozambique)

Mozambique's national Institute of Statistics, (INE) says the country's economy slowed to 3.3 percent in 2016 against 6.6 percent in the previous year after the government failed to make payments to bond holders following a scandal over undisclosed debts of more than $2 billion in loans that were not approved by parliament, APA can report on Friday.

"The discovery in April 2016 of $1.4 billion (10.4 percent of Mozambique's GDP) of previously undisclosed loans has pushed the total stock of debt at end-2015 to 86 percent of GDP," reads the INE statement emailed to APA on Friday.

Until recently one of Africa's brightest prospects, Mozambique is facing its biggest economic crisis since a 16-year civil war ended in 1992 after the debt scandal emerged in April last year and problems have accelerated since the IMF and Western governments withdrew aid vital to funding the country’s budget, which gained independence from Portugal in 1975 after five centuries as a colony.

The country's currency, the metical also dropped 40 percent while public services deteriorated and inflation rising to 25 percent from just 5 percent in 2015.

Mozambique hopes its financial saviour will be the development of huge gas reserves, which the government says would begin to flow by 2021.

Bond-holders will be relying on gas revenues to get their money back, making the timing crucial.

Energy executives and Western diplomats said these future riches are what makes Mozambique appealing to investors but the gas will probably arrive later than hoped given political wrangling and depressed energy prices.


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