June 23, 2016 / 11:37 AM / 2 years ago

Mozambique's national airline to suspend flights to Angola

MAPUTO, June 23 (Reuters) - Mozambique’s state-owned airline LAM has said it will suspend flights to the Angolan capital Luanda from July 1, blaming financial and operational difficulties as the government struggles with a debt crisis that is crippling the economy.

LAM, which is undergoing a restructuring, said in a statement late on Wednesday flights on the route would resume once market conditions improved.

The government last year recommended to LAM’s board that it assess the profitability of its routes.

LAM also flies to South Africa, Kenya, Tanzania and Zimbabwe, according to its website, in addition to destinations within Mozambique.

Angola is running short of foreign reserves to pay for imports because its national oil firm has not contributed to state coffers since January, its president said on Wednesday.

Mozambique has run up more than $2 billion of private debt deals. An International Monetary Fund team is in the country to try to find a way out of the debt crisis that is hurting the economy of one of the world’s poorest countries and could trigger social and political unrest.

The metical currency is trading near record lows against the dollar, which is likely to fuel inflation, already at 18 percent in the nation of 25 million people.

The currency was trading at 64.50 per dollar on Thursday, after falling to a record low of 66/dollar last week. (Reporting by Manuel Mucari; Writing by Olivia Kumwenda-Mtambo; Editing by James Macharia and Mark Potter)

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