Nampula provincial government has no money to pay bills
The financial rating agency Moody’s says that, among African countries, Angola and Mozambique will face the greatest liquidity problems in 2017 because of falling raw material prices.
In a report on the ratings of sub-Saharan African countries, Moody’s says that “the negative impact on liquidity resulting from the oil price shock and raw materials will be mainly concentrated in Gabon, Mozambique, Democratic Republic of the Congo and Zambia, but it will also be evident in Angola and, to a lesser extent, Nigeria”.
The regional report, to which Lusa has access, is titled ‘A negative perspective in the context of liquidity stress, low growth and political risk”, and points out that “at the end of last year, Moody’s had revised downward a third of 19 countries in the region, by on average two levels, compared with the 29 descents in global ratings, representing 22% of the 134 countries analyzed” by the financial rating agency.
Five of the seven countries which have seen their ratings fall, among which are Angola (B1 with perspective of negative development) and Mozambique (Caa3 with perspective of negative development), “have a perspective of negative development, underlining Moody’s view that the pressures that led to the fall in their rating will persist in 2017”, write analysts.
“The economies of sub-Saharan Africa will continue to face liquidity difficulties caused by raw materials in 2017, with recurring budget deficits in challenging financial conditions,” Moody’s says.
“These are important constraints that will continue to underpin our analysis on the perspective of negative development for sub-Saharan Africa in general,” the analyst adds.
Moody’s sees the perspective of negative development persisting over the next 12 to 18 months, and anticipates further downward rating revisions. Both Angola and Mozambique already have a ‘no investment recommendation’ rating, traditionally known as “trash” or “junk”.
On average, Moody’s anticipates economic growth of 3.5 percent this year in countries of the region, which represents an increase compared with the 1.5 percent anticipated in 2016.
“However, the value will vary significantly within the region; countries which are dependent on exports of raw materials are going to see their economic activity limited in 2017,” the report reads.Source: Lusa