Mozambique is sinking deeper into financial crisis after it admitted to more than $1 billion of previously undisclosed debts. As Sara Hemrajani reports, the African nation is now facing a freeze on new loans from the World Bank.
A rusting reminder of what was meant to be. These fishing boats, bought with foreign money three years ago, were to become Mozambique's state-of-the-art tuna fleet. The business was going to create jobs, provide food and earn millions of dollars in hard currency. But the fleet's early catch wasn't enough to pay back the $850 million loan. And when Mozambique struggled to make the payments, investors found most of the cash had been reallocated to the defence budget. The country's troubles didn't end there... Just recently, the IMF says it was told of hidden debt pile worth more than $1 billion. SOUNDBITE: Ragendra de Souza, economist, saying (Portuguese): "The debt that was declared recently is a huge burden on the economy. It was at 42 percent of GDP - now that's nearly 70 percent. That means, with the production capabilities we now have, like exporting coal and natural gas, that the debt is unsustainable." The revelation has drawn a furious response from international lenders and donors, including the World Bank. They've now suspended any new loans, pushing Mozambique deeper into financial crisis and emergency talks. SOUNDBITE: Carlos Agostinho do Rosario, Mozambique Prime Minister, saying (Portuguese): "We are going to share, with full openness, the information about the economic situation in the country, and the principle reasons for the economic difficulties that the country is going through." Mozambique had become one of southern Africa's brightest economies after emerging from a civil war in 1992. But with foreign debts ballooning to nearly $10 billion, some fear a return to conflict.