Mozambique admits to unsustainable debts

Mozambique has said its debt levels are unsustainable and that it must restructure repayments if the impoverished country is to receive further International Monetary Fund (IMF) aid.

The IMF and World Bank suspended aid to Mozambique in April after news surfaced that the government had hidden $1.4 billion in borrowing.

The IMF said Wednesday that it “acknowledges the Mozambican authorities’ intention to engage in discussions with certain creditors with a view to restore Mozambique’s debt to a sustainable path”.

“IMF staff stands ready to assist the authorities in their endeavour,” it added.

One of the 15 poorest countries in the world, Mozambique has been hit hard by lower commodity prices.

The country’s metical currency has collapsed by 70 percent against the US dollar this year after falling 36 percent in 2015.

Public debt is forecast to reach 130 percent of GDP by the end of the year.

“Mozambique’s primary objective is to resume relations with the IMF in order to stabilise the economy and restore confidence of the international community,” the government said in a document released in London on Tuesday.

“IMF discussions can only resume if Mozambique (puts) debt on a sustainable path.”

The government stressed that the nation’s long-term prospects were strong due to its nascent gas sector.

Vast reserves of gas have been discovered in the north of the country since 2010 but exploration has been slow and gas prices have fallen in recent years.

The government said tensions with the Renamo opposition group, which waged a 16-year civil war that ended in 1992, were behind its decision to hide the debt.

Clashes between government forces and Renamo have erupted regularly this year, with key roads often closed due to the unrest.