Mozambique Elections: CNE has only a third of money needed for October elections
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Consulting services firm IHS Markit believes that Mozambique’s sovereign debt crisis throws doubt on all forecasts concerning the country, and that rescheduling payments is the only viable solution.
“A rescheduling agreement is the only short-term solution to the sovereign debt crisis in Mozambique, and should be supported by the International Monetary Fund,” analysts say today in response to questions posed by Lusa about expectations for this year.
The Mozambican sovereign debt crisis is the main focus of concern in forecasts made by IHS Markit, which says that this issue calls into question all estimates regarding economic growth, exchange rate developments and inflation.
“The lack of financial support from the IMF and other external donors has hampered public sector investment programs in 2017 and the effects are expected to continue this year, with no prospect of a solution by mid-2018 at the earliest,” IHS Markit adds.
IHS Markit forecasts for sub-Saharan Africa suggest the region should have nearly doubled growth last year to 2.5 percent, but challenges for this year remain, including low oil prices, political instability and the rating downgrades.
“The region’s economic performance has been the lowest since 1994, and the recovery in 2017 has been the lowest since 2000, with the exception of 2016,” IHS Markit analysts say.
As for expectations for 2018, analysts say they anticipate a drop in the average price of oil from US$60 to US$56 dollars a barrel, and stress that “there is still a lot of uncertainty regarding the oil market”.
In addition, they note, “the increase in other raw materials such as metals, minerals and agricultural products will not be sustainable, and therefore low prices will contribute to poor economic performance over the coming year”.
In their answer to questions posed by Lusa, analysts say that “these economies are very dependent on oil, and so they face a difficult task restarting growth”.
In non-oil sectors, however, they say the outlook is more favourable, pointing to bigger harvests and stronger demand for diamonds and copper, among other raw materials.
Among the fastest growing countries are Ethiopia, Côte d’Ivoire, Senegal, Tanzania, Kenya and Rwanda, but even these do will escape the risks that IHS Markit anticipates this year.
“The most pressing risk is the decline in commodity prices,” the consultants say, while also highlighting US policy normalisation, Brexit, the slowdown in global trade, weather, political instability, sovereign ratings, and declining capital flows.
“Developments related to the expected slowdown in China’s economic growth also leave the region vulnerable due to the strong ties between the two economies and the possibility that this slowdown will be reflected in trade and also in investment and financing to the continent,” the IHS Markit survey concludes.
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