Mozambique: Inflation less than 2% in first quarter
Macauhub (File photo)
The public debt crisis in Mozambique will continue without a quick resolution, with the Mozambican state having been in financial default for some time now, the Economist Intelligence Unit (EIU) said in its latest country report.
Th EIU analysts again said that the most likely scenario will be a merger of the three state-guaranteed commercial loans (one bond issue and two syndicated loans) into a single instrument, with borrowers being forced to accept a loss of invested capital and payment to be delayed until the middle/late 20’s.
It is generally agreed that at that time the ENI and Anadarko Petroleum groups (which have not yet announced their final investment decision) are selling the natural gas extracted in the Rovuma basin, guaranteeing the Mozambican state tax revenues that are expected to be significant.
The timing for this whole process is unknown, and creditors are hoping that the report prepared by Kroll Associates UK will be fully disclosed by the Attorney General of the Republic of Mozambique and the International Monetary Fund is expected to return to negotiations with the Mozambican government for approval of an aid package.
The IMF and, at a later date, the international organisations and western countries that have been supporting the Mozambican State Budget, suspended all aid following the disclosure of two loans that were taken on illegally by two public companies.
The EIU analysts predict that Gross Domestic Product, after having reached the lowest point of the last 15 years in 2016 with a growth rate of 3.8%, this year will see growth of 4.2%, driven almost exclusively by mining resources.
This includes coal, exports of which are expected to grow, due to a rise in prices on international markets, demand from India, Mozambique’s main market for this product, and the efforts of mining companies to increase efficiency.
After 2017, the EIU expects Mozambique’s economic growth to accelerate, estimating an average rate of 5.3% in the 2018/2021 period, with the last three years recording rates ranging from 5.3% to 5.5%.Source: Macauhub