Mozambique: Economy now recovering, says prime minister – Watch

Login

Register

http://www.clubofmozambique.com/

Mozambique: Economy now recovering, says prime minister – Watch

6:49 CAT | 28 Mar 2018

TVM / The shocks the Mozambican economy suffered in 2015-2016, the Prime Minster said, led the government to conclude “we must continue efforts to improve our productive base through measures to stimulate increased production and productivity, and thus we will be able to export more and generate resources to finance imports”.

Mozambican Prime Minister Carlos Agostinho do Rosario on Wednesday told the Mozambican parliament, the Assembly of the Republic, that the Mozambican economy is now recovering, after the crisis of 2016, and the government expects the growth rate to rise to eight per cent a year, as from 2022/2023.

But this is entirely dependent on the liquefied natural gas (LNG) projects in the Rovuma Basin, off the coast of the northern province of Cabo Delgado.

The first of these projects, by a consortium headed by the Italian energy company ENI, is for a floating LNG unit above the Coral South gas field which will produce 3.3 million tonnes of LNG a year. The company British Petroleum (BP) has agreed to buy 100 per cent of this production. The floating LNG platform will be installed by late 2021, said Rosario, and so the first exports should be in 2022/23.

A second consortium, headed by the US company Anadarko, will liquefy the gas onshore, at two factories to be built on the Afungi Peninsula, in Palma district. The government has approved the Anadarko development plan, but production is unlikely to start before 2029.

Rosario admitted that gas revenues are a narrow basis on which to build the economy. “Our economy cannot be dependent only on the extractive industry”, he said. “To generate more employment and income, we have to bank on diversifying our economy”.

That meant, in the first instance, banking on agriculture “in its entire value chain, from production to agro-processing and marketing, in order to capitalise on the job opportunities generated in the various phases”.

“Banking on agriculture”, Rosario added, “is the right path to increasing income, reducing the cost of living, and increasing self-sufficiency in foodstuffs, which will allow the country to reduce its outside dependence”.

He blamed the economic crisis that had hit the country in 2016 on such factors as the fall in the prices of some of Mozambique’s key exports, natural disasters such as the floods of early 2015, and the severe drought of 2016, and the suspension of financial aid from the 14 donors who used to provide direct support to the Mozambican state budget. (But Rosario did not mention that the donors cut this support because of the loans of over two billion US dollars to three security-related companies, illegally guaranteed by the previous government under President Armando Guebuza).

The shocks the Mozambican economy suffered in 2015-2016, the Prime Minster said, led the government to conclude “we must continue efforts to improve our productive base through measures to stimulate increased production and productivity, and thus we will be able to export more and generate resources to finance imports”.

But it was also crucial “to reduce the budget deficit through the efficient allocation of resources and improved collection of state revenue”.

The government was working to restore confidence in Mozambique among the international financial markets, and to bring the country’s public debt down to sustainable levels. For the first time, he revealed that the government has negotiated a restructuring of Mozambique’s debt with China and India “in order to release resources to finance the priority actions of the government’s five year programme”.

Dialogue with the country’s other creditors was continuing , and Rosario believed that his would help restore international confidence in Mozambique.