Mozambique debt restructuring to drag on until 2019 at least – Consultant

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Mozambique debt restructuring to drag on until 2019 at least – Consultant

11:00 CAT | 05 Dec 2017

The BMI Research consultant group revealed yesterday that it thought Mozambique’s debt restructuring process would not be resolved until 2019 at the earliest, and that lack of financing and pre-election spending would limit infrastructure spending in the country.

“We see it as unlikely that donors and concessional institutions will re-engage with Mozambique over the coming quarters,” the consultants write in an economic analysis note on capital spending.

In the analysis, which Lusa has access to, the Fitch consultancy experts say that, with the approach of the municipal elections in 2018 and legislative elections in 2019, “the authorities will refrain from cutting current expenditure and thus capital spending will inevitably suffer most in fiscal consolidation”.

This, they continue, will result in “a smaller implementation of infrastructure projects, which will negatively influence the competitiveness of the economy and keep GDP growth well below the trend of recent years”.

BMI Research predicts a government deficit of 4.4 percent this year and 3.8 percent in 2019, noting that last year, “capital expenditure almost stopped compared to the previous year”.

Capital expenditure comprises infrastructure costs borne by the state and is of particular importance in Mozambique due to the weak logistic conditions faced by large multinationals wanting to invest in the country.

As for the country’s economic growth, the consultancy anticipates it accelerating in the near future “due to low inflation, exchange rate stability, increased exchange production and investments in infrastructure”.

BMI therefore forecasts an acceleration of real GDP growth from 3.8 percent last year to 4.1 percent this year and 4.6 percent in 2018, still well below the 7 percent average registered between 2000 and 2015.

Source: Lusa