Mozambique: Country grows 5.8% with gas boosting economic diversification – AfDB

Login

Register

http://www.clubofmozambique.com/

Mozambique: Country grows 5.8% with gas boosting economic diversification – AfDB

7:11 CAT | 30 Jan 2020

Photo: Twitter / @AfDB_Group

The African Development Bank (AfDB) has forecast that Mozambique will grow 5.8% this year and 4% in 2021, saying that gas discoveries make it possible to diversify and improve resilience and competitiveness.

“With gas discoveries off the coast estimated at 180 billion cubic feet, the country has the opportunity to diversify its economy while improving its resilience and competitiveness,” said the African Economic Outlook 2020 released on Thursday in Abidjan, the headquarters of the AfDB.

This year’s report, under the subheading ‘Developing Africa’s workforce for the future’, stressed that the gas sector can transform subsistence agriculture into agribusiness through different energy solutions, and leverage other industries such as fertilisers, fuel and metalworking.

On the other hand, the AfDB added that planned investments in gas and the supply industry can also improve macroeconomic stability, with more budget revenues that can contribute to surpluses and a sovereign fund that absorbs external shocks.

In the part dedicated to Mozambique, very focused on the gas sector, the AfDB’s economic research department stresses that infrastructure needs for natural resource-related projects can also trigger private and public-private investment.

Local companies are well prepared to partner with international investors and secure these projects and benefit from the signing of the third and final peace agreement with the opposition, supporting the demobilisation and social reintegration of armed troops.

In the report, the AfDB recalled the budgetary difficulties following the disclosure of the hidden debt scandal and predicts that the budget deficit will stand at 4.5% of GDP this year and 4.3% in 2021, increasing concerns about debt sustainability.

Despite the optimistic tone, noting that the country is reducing the debt to GDP ratio, improving tax collection and reaching debt restructuring agreements, the Bank warned that the current account deficit is expected to average 65% of GDP this year and next due to imports related to the operationalization of natural gas exploration.

This increases the challenges and pressures on deficit financing and international reserve management, the AfDB said.

Source: Lusa