Mozambique economic growth to slow to 4.5 percent in 2016 - IMF

MAPUTO (Reuters) - Mozambique's economic growth will likely slow to 4.5 percent in 2016 from 6.6 percent the previous year due to rapidly rising inflation and growing government debt, the International Monetary Fund said on Friday. Michel Lazare, the leader of a Fund team that visited the southern African country, said the discovery of more than $1 billion of previously undisclosed government debt would increase pressure on the economy. "Economic growth in 2016 is expected to decline to 4.5 percent, nearly three percentage points below historical levels, with substantial downside risks to this projection," Lazare said. The IMF had initially postponed the trip after finding that Mozambique had concealed borrowing for its defence sector from Credit Suisse and Russia VTB Bank. "The discovery in April of $1.4 billion (10.4 percent of Mozambique's GDP) of previously undisclosed loans has pushed the total stock of debt at end-2015 to 86 percent of GDP," Lazare said, adding that state debt had reached a high risk of distress. Lazare said the Fund welcomed the Mozambican prosecuting authority's investigation into state firms responsible for the undisclosed and irregular lending. (Writing by Mfuneko Toyana; Editing by Andrew Heavens)