Mozambique, reeling from a sovereign debt crisis, sees 2016 economic growth slowing to 4.5 percent from initial forecasts of 7 percent and needs to bring in austerity measures in an amended budget, Finance Minister Adriano Maleiane said on Thursday.

“This means that revenue that we should have will also go down,” the minister told journalists after an extraordinary meeting of the Council Of Ministers which approved an amended budget which will be put before parliament on Monday.

The new government forecast is in line with a recent one by the International Monetary Fund, which in April said the southern African nation had borrowed more than $1 billion previously undisclosed, throwing into doubt its ability to meet mounting debt obligations.

Mozambique, one of the world’s poorest countries which has huge untapped gas reserves, has been thrown into economic turmoil by revelations of financial malfeasance.

These include an $850 million Eurobond issued in 2013 to finance a tuna-fishing fleet. Subsequently, it emerged that $500 million of the cash was actually spent on defence equipment and has since been re-allocated to the defence budget.

Under its austerity plan, the government aims to reduce spending on goods and services by 40 percent, saving overall 24 billion meticais ($370 million) out of a budget of 243 billion meticais.

($1 = 64.2700 meticais)

Source: Reuters