Mozambique elections: Results will be tight but post-election environment will be calm – Standard Bank

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Mozambique elections: Results will be tight but post-election environment will be calm – Standard Bank

2:27 CAT | 14 Oct 2019

File photo: Lusa

Standard Bank’s economic research office says Tuesday’s presidential, legislative and provincial elections in Mozambique will be “very competitive”, but expects a more relaxed post-election environment because of the improved degree of political decentralisation they presage.

“The general elections to be held on October 15 are likely to be very competitive,” Standard Bank analysts write in a note about Mozambique, adding that they expect a calmer period following the vote.

“While we remain confident that political decentralisation will prompt a more peaceful environment following the elections, it remains to be seen whether the authorities will be able to restore order and peace in the districts of Cabo Delgado province, which have seen an escalation of terrorism-related violence in the last two years,” the note, which Lusa has seen, adds.

Analysts believe the announcement of an initial investment of US$500 million (€450 million) for preparatory work in Rovuma Basin Area 4, along with the US$880 million (€800 million) tax revenue that the Government expects to receive following the transaction between the Occidental and Total oil companies, will support the recovery of the metical.

“This will likely persuade the Bank of Mozambique’s monetary policy committee to cut interest rates more aggressively than previously anticipated,” they write.

Even with the expected drop in interest rates, analysts remain only “cautiously optimistic about the possibility of a robust recovery in economic growth next year,” anticipating just a 2.7% expansion.

“The forecast reflects the impact of investments in the natural gas sector, but still shows a moderate performance for the rest of the economy,” reads the document, which predicts a “slow start” to economic activity in 2020 pending the formation of a new government and the approval of a State Budget for next year.

Source: Lusa