Mozambique's 'hidden' debt restructuring inevitable – Governor Zandamela
Reuters (File photo) / A view of Maputo
Business Monitor International says that, with the exception of the gas sector, Mozambique’s financial default in January and unsustainable levels of public debt threaten public and private investment in the country.
“Mozambique will face a period of low economic growth until 2018 due to the recent financial default and unsustainable debt burden, which hampers both public and private sector investments,” the Fitch consultancy specialists write in an analysis to which Lusa has access.
In the commentary, analysts say that the exception to investor scepticism is the natural gas sector, as they expect “progress on Eni and Anadarko projects in the coming months”, something which is already happening with the entry of Exxon Mobil into the Rovuma Basin Area 4 project.
According to consultancy, Mozambique’s economic growth is expected to slow to 3 percent this year, accelerating slightly to 3.5 percent in 2018, but remaining well below the 2010 to 2016 average, when wealth expanded by an average 6.5 percent per year.
“Our pessimistic view of short-term economic development in Mozambique is largely based on the temporary gap that we expect to exist in the country’s growth model, which relies heavily on infrastructure development,” the analysts write.
The January default, however, “will exacerbate investors’ weak sentiment, which was already suffering from falling commodity prices”, meaning, they conclude, that Mozambique should be less attractive to industries Most important for the country, who already have difficulties accessing the necessary financing to grow.Source: Lusa