Mozambique is in critical situation due to excessive debt, German NGOs say

Mozambique is the African country in the most critical situation in terms of excess public debt, with the worst economic indicators on the continent, according to a report prepared by German non-governmental organisations Misereor and Erlassjahr, published on Thursday.

The document recalls that Mozambique was considered a model African country until two years ago, when it became public knowledge that two state-owned companies – ProIndicus and Mozambique Asset Management – had taken on State-backed loans in the amount of US$1.2 billion, in violation of legislation in force in the country.

Tuna company Ematum, which is also state-owned, added a further US$850 million to the country’s debt, which was followed by the country’s inability to honour that debt, with consequences including devaluation of the currency and increased consumer prices.

The report from the two NGOs, an alliance of 600 civil society, religious and political organisations that call for debt pardons to poorer countries, according to Deutsche Welle, adds that in Africa there are ten countries classified as being “critically” or “highly critically” indebted and that this is expected to continue to increase.

Seven countries – Angola, Mozambique, Gambia, Chad, Democratic Republic of Congo, Somalia and Zimbabwe – only partially pay or have stopped paying their debts, the report said.

Angola, which has been affected by a drop in oil prices, is considered to be in a “critical” situation along with Cabo Verde (Cape Verde), which is also on the list of countries in a “critical or “highly critical” situation due to its vulnerability to natural disasters. (macauhub)