Mozambique’s debt crisis has destabilized government operations and the country will have to reorganize 20 state-owned companies, privatize them or shut them down, President Filipe Nyusi said.
The nation admitted in April to having $1.4 billion in loans it hadn’t disclosed to investors and last month failed to make a $178 million interest payment on one of the debts.
“You are aware about the increase in our debt,” Nyusi told businessmen over the weekend, according to STV, a closely held broadcaster. “Like it or not, it’s destabilizing our normal operations, the functioning of state institutions.”
The government accepts it has a debt problem that needs to be addressed and has engaged with the International Monetary Fund and other statutory bodies to solve it, he said. Mozambique will reassess the viability of any of its companies “with too much fat.” State-owned Airports of Mozambique said last week it would restructure $500 million in loans after a currency slide that weakened its ability to repay debt.
“It is a restructuring or even reassessment of their existence,” Nyusi said.
The nation that’s struggling under a mountain of debt sought to restructure a $535 million loan to the Mozambique Asset Management, or MAM, after it missed a May 23 interest payment. The country, which holds one of the world’s biggest gas fields off its coast, owes foreign creditors as much as $9.85 billion. Its currency has dropped 18 percent against the dollar this year, adding to a 32 percent drop in 2015.
Russian bank VTB, which had lent MAM the money, has transferred $485 million to other investors, Interfax reported Sunday, citing the lender’s press service.
The metical’s weakness has pushed consumer prices higher. The annual inflation rate, which rose to 18.3 percent in May, has seen a steady climb since a low of 1.29 percent in May 2015, according to the National Statistics Institute of Mozambique.