Mozambique: 22.1% of 2022 State expenditure went to defence and public security
Reuters (File photo) / A view of Maputo
Standard Bank says that Mozambique has already weathered the worst of the economic crisis, but warned that dependence on natural resources is a risk, owing to the volatility of this sector.
“The country has probably already experienced the worst of this crisis,” Standard Bank’s chief economist in Mozambique, Fáusio Mussá, said in remarks to reporters at an economic conference sponsored by the institution.
Mussá said that the metical had appreciated 15 percent against the dollar in the last six months, with a dollar now costing 60 meticais.
“Our belief is that next year we will have single digit inflation. Our best adjusted expectation this year is around 14 percent, but still with a high average of around 18 percent,” Mussá explained.
The current behaviour of economic indicators, such as the acceleration in gross domestic product (GDP), the fall in inflation and the increasing stability of the national currency, was putting Mozambique on the path to recovery, Mussá said.
Mussá also pointed to the decision of the consortium led by the Italian multinational ENI to move forward with the construction of the floating liquefied natural gas production platform in the Rovuma basin in northern Mozambique as a sign that the country is regaining the confidence of international investors.
“It appears that investors continue to look to Mozambique as a potential market, with a strong appetite to continue investing,” said Standard Bank chief economist.
In addition, the authorities have been committed to creating conditions that allow the sustainability of debt servicing by restructuring the country’s external debt.
“I think the country is gathering conditions to create confidence so that it can restructure these debts, and that it may be possible over a period of time to service debt without compromising macroeconomic stability,” said Mussá.
In his presentation during the conference, Standard Bank’s chief economist in Mozambique warned that Mozambique’s economic prospects are anchored in the positive evolution of the natural resources sector, noting that any retreat in this area could jeopardize the country’s emergence from the crisis.
“If there is a delay in starting up these projects, it means that we are probably going to experience difficulties for a longer time,” he said.
Mozambique recorded less than 4 percent economic growth last year, its lowest in decades. Annual inflation peaked at about 30 percent as a result of falling commodity prices, military tension, natural disasters and a spiral of debt worsened by the discovery of loans secretly endorsed by the government between 2013 and 2014.
Leave a Reply
Be the First to Comment!
You must be logged in to post a comment.
You must be logged in to post a comment.