Prime Minister Narendra Modi will begin a four-day tour throughout Africa, with his first stop in Mozambique, according to The Tribune. The prime minister has agreed to a Memorandum of Understanding with the southern African country to double the amount of legume imports by 2021. Mozambique’s economy has struggled due to such factors as corruption and decreased donor aid from the international community.
On Wednesday, the remarkably poor African nation of Mozambique received a delegation from the International Monetary Fund (IMF). The IMF was invited to visit Mozambique to help the government find a way out of a crisis of debt that has crippled the nation and could lead to civil and political unrest.
The IMF delegation is scheduled to stay until June 24, but diplomats and analysts do not appear optimistic about the chances of a successful resolution. Mozambique acquired more than $2 billion in private debt deals while already indebted to a number of foreign nation donors.
President Filipe Nyusi is pivoting to China for financial aid after rejection from the European Union, according to Deutsche Welle. Nyusi contends with a stagnant economy suffering from low commodity prices, and the public is growing increasingly frustrated as living costs and lacking opportunities make life harder. Mozambique has been embroiled in several major scandals, stoking widespread distrust among donors and Western nations.
Mozambique’s return to the international limelight reads like a John le Carré novel. The elements of a bestseller are all present: growing internal instability, unexplored natural gas deposits, international loans to purchase weapons disguised as lending to fund tuna boats, and hidden public loan guarantees to private companies owned by the secret services.
Mozambique objected to the International Monetary Fund’s (IMF’s) accusation that officials concealed additional loans from Russia VTB Bank and Credit Suisse for defense spending, according to Reuters. The IMF cancelled a trip to Mozambique on Friday in wake of the alleged undeclared loans, but Finance Minister, Adriano Maleiane, stated that the accusation is misguided and stems from confusion. Mozambique borrowed $286 million from the IMF to help the country through a turbulent world economy.
It is unsettling how quickly the shine can come off a development success story. Only a few years ago, Mozambique was standing at the helm of sustained and rapid economic growth. Optimism was nurtured by high commodity prices, robust foreign direct investment and warm relations with development financing agencies.
Economic and social wobbles after the global financial crisis seemed to have been relegated to the past. Political minds were even discussing how to achieve annual growth rates in the double digits.
Human Rights Watch has called for a government investigation into the military for alleged executions and sexual assaults against citizens, according to the Associated Press. Over 6,000 people have fled to Malawi since late 2015 as tensions between the ruling Mozambican Liberation Front (FRELIMO) and opposition group Mozambican National Resistance (RENAMO) escalate to violent levels.
Mozambique has enjoyed relative peace since 1992, but recent violence could pose a threat to political and economic stability.
Mozambique fails to improve economically as the southern African nation suffers from low commodity prices and overindulgent spending, according to AFP. The currency fell to a record 35 percent in 2015 against the dollar.
The government recently borrowed $286 million from the IMF, but it will not prove sufficient to save Mozambique from mounting issues—most notably the staggering debt. Public debt will climb to 60 percent of GDP as the year draws to a close. Further, donors and investors grow concerned over Mozambique’s finances and overall direction of the country.
Mozambique has one of Africa’s lowest electrification rates. The national grid reached just 23% of the population in 2012. Around 68% of Mozambicans live in widely dispersed rural areas making extending access to electricity difficult. The national grid infrastructure is extremely limited and increasingly struggling to cope with rising demand.
According to data from the International Monetary Fund, Mozambique’s economy will grow 6.5 percent in 2016, as natural gas projects will boost the economy next year, according to Reuters. The economy was set to expand sooner if not for the delay of natural gas investments. The nation’s central bank expects 7.0-percent growth in 2015, but the government expects a target of 7.5 percent.
