Mozambique’s growth forecast revised down to 3.4% this year – UN

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Mozambique’s growth forecast revised down to 3.4% this year – UN

12:22 CAT | 22 May 2018

The United Nations has downgraded Mozambique’s growth forecast to 3.4 percent this and next year, against the previous forecast of 3.8 percent this year and 3.9 percent in 2019.

“In Mozambique, the low prospects of a rapid resolution of the debt problem, as well as the continuation of political instability between the major parties, translates into low levels of investment and domestic demand, leading to a deterioration of the perspectives in the short term, so GDP growth in 2018 and 2019 has been downgraded to 3.4 percent,” the Africa Economic Affairs analyst at the United Nations Helena Afonso has told Lusa.

Previously, the UN anticipated a growth of 3.8 percent this year and 3.9 percent next year, well below the historical average of the last decade, but still above the forecasts of the International Monetary Fund (IMF), which anticipates economic expansion of 3 percent this year and 2.5 percent in 2019.

Afonso adds that from next year “a more robust economic recovery is expected with modest developments in the gas industry”, but warns that, until then, “some budgetary consolidation is likely”. Mozambique, she explained, has “an unsustainable amount of debt and an inability to solve the financial default of public debt and loans to public companies”. As a result, “access to external financing is very limited”.

Addressing parliament last week, Minister of Economy and Finance Adriano Maleiane said: “The government is not paying the guaranteed commercial and syndicated debt, whose stock is US$1,859 million (EUR 1,575 million), and is currently negotiating its restructuring.” The conclusion of negotiations with creditors would help improving the classification of debt and its sustainability ratios, he said.

The minister said that the country had been making multilateral and bilateral foreign debt service payments regularly, and domestic debt as well, having disbursed US$217 million last year (EUR 183 million euros).

In total, Mozambique’s external public debt amounted to US$10.6 billion (EUR 8.9 billion) in 2017, while domestic public debt exceeded 100.5 billion meticais (EUR 1.4 billion). The state-guaranteed commercial debt in relation to which the country is in default concerns the so-called “hidden debts” discovered in 2016.

Source: Lusa