Mozambique: Government highlights economic growth of 5% in 2023
DW (File photo)
Financial analysts at the British magazine The Economist consider the Mozambican government’s revenue projections too optimistic and predict slow economic growth with high inflation.
The Economist Intelligence Unit (EIU) warned on Saturday that the Mozambican government’s projections for the country’s economic growth are too optimistic in a context of weak revenues and failed public companies.
The economists consider the government’s forecasts for future revenues to be “unrealistic” because of the budgetary pressures affecting the country. Filipe Nyusi’s administration estimates revenues of EUR 5.8 billion for 2023, representing 60 percent of current GDP.
According to the EIU report, the pressure to increase spending and limited access to markets is accentuating economic difficulties.
Analysts believe that the crisis will generate “incoherent fiscal policy and increased delays in payments to suppliers and creditors”, and warn that there is no quick fix to the problem. In addition, the end of the “era of many credits” will accentuate political instability.
The devaluation of the metical could be beneficial, the EIU believes, but “the revenues and profits, equivalent to a third of government revenues, may be shaken by poor growth”. With this, the outlook consists of rampant inflation, high interest rates, insecurity and concerns about the quality of sovereign credit.
Crisis
The economic crisis in Mozambique worsened in early 2016 following the discovery of hidden debts of EUR 1.29 billion. Financing from international partners has been suspended and confidence in the country’s macroeconomic indicators has been hit.
In April, the International Monetary Fund (IMF) also suspended credits and demanded an independent international audit on undisclosed debts to resume support for the African country.
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