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Mozambican govt seeks investors to help cut debt

Mozambican govt seeks investors to help cut debt

MAPUTO – Mozambique will look to encourage new investments in its growing economy to help it extend its success in cutting foreign debt to US$3,3 billion, its Finance Minister Manuel Chang said on Thursday.

But it did not plan to end a reliance on debt totally, with soft loans, primarily from the World Bank and International Monetary Fund seen as an important source of funding to grow the economy. The minister gave no time frames for cutting debt.”We need to have a sustainable debt which we can pay each year (so) in seeking foreign aid the government would prioritise grants first, and then highly concessional loans,” he told Reuters in an interview.”But these soft loans remain essential, and so the government would continue to contract further debts.”Mozambique has become an African success story, helped by debt relief and large inflows of foreign aid.According to the IMF, economic growth in the southern African nation should measure seven per cent in 2007, down slightly from an expansion of nearly eight per cent in 2006.Chang said the country’s external debt declined by 57 per cent during 2006 and stood at US$3,3 billion by the end of the year.The decline added to substantial debt relief granted in terms of the Heavily Indebted Poor Countries (HIPC) programme in 2005 that took its burden down from a high of around US$6 billion.”Since the first phase of the two-phased HIPC debt relief initiative, which cut the Mozambican debt to US$4,6 billion by the end of 2005, now we have already paid 57 per cent of our foreign debt.”The annual debt servicing cost had fallen to just US$57 million in 2007 from more than US$100 million the previous year, he said.Chang said Mozambique would encourage new investments in infrastructure and to take advantage of its abundant mineral wealth as part of a bid to further reduce the debt burden.”Mozambique has one of the largest deposits of coal in the SADC (Southern African Development Community) region and we are encouraging investors to settle for business in Mozambique.”The IMF, the World Bank and the African Development Bank (AfDB) agreed to cancel the debts of the poorest countries in 2005.The IMF cancelled US$154 million in debt owed by Mozambique, while the ADB wrote off US$500 million of that countries debt.Nampa-ReutersThe minister gave no time frames for cutting debt.”We need to have a sustainable debt which we can pay each year (so) in seeking foreign aid the government would prioritise grants first, and then highly concessional loans,” he told Reuters in an interview.”But these soft loans remain essential, and so the government would continue to contract further debts.”Mozambique has become an African success story, helped by debt relief and large inflows of foreign aid.According to the IMF, economic growth in the southern African nation should measure seven per cent in 2007, down slightly from an expansion of nearly eight per cent in 2006.Chang said the country’s external debt declined by 57 per cent during 2006 and stood at US$3,3 billion by the end of the year.The decline added to substantial debt relief granted in terms of the Heavily Indebted Poor Countries (HIPC) programme in 2005 that took its burden down from a high of around US$6 billion.”Since the first phase of the two-phased HIPC debt relief initiative, which cut the Mozambican debt to US$4,6 billion by the end of 2005, now we have already paid 57 per cent of our foreign debt.”The annual debt servicing cost had fallen to just US$57 million in 2007 from more than US$100 million the previous year, he said.Chang said Mozambique would encourage new investments in infrastructure and to take advantage of its abundant mineral wealth as part of a bid to further reduce the debt burden.”Mozambique has one of the largest deposits of coal in the SADC (Southern African Development Community) region and we are encouraging investors to settle for business in Mozambique.”The IMF, the World Bank and the African Development Bank (AfDB) agreed to cancel the debts of the poorest countries in 2005.The IMF cancelled US$154 million in debt owed by Mozambique, while the ADB wrote off US$500 million of that countries debt.Nampa-Reuters

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