Mozambique’s national public debt rising to 110% of GDP this year – Capital Economics

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Mozambique’s national public debt rising to 110% of GDP this year – Capital Economics

12:42 CAT | 19 Oct 2018

File photo: Lusa

Capital Economics says that Mozambique’s public debt is expected to increase from 102% of gross domestic product last year to 110% this year, before dropping to 100% in 2019.

“The Mozambican economy will remain weak in 2019,” analysts write in the Economic Outlook for Africa for the fourth quarter of this year, released yesterday.

The investors note, which Lusa has seen, says “the burden of public debt remains alarmingly high,” but analysts add that “a gradual negotiation with creditors is more likely now than a serious crisis”.

The economists forecast Mozambique to grow 3.5% this year and next before accelerating to 4% in 2020, still well below the above-7% average of the last decade.

As to the value of the metical, the document reads that “after falling sharply in 2015 and after the release of the news about the government’s hidden debt, the currency has remained stable in recent months and the big falls are outdated”.

Negotiations with holders of public debt securities “may even make the currency appreciate slightly in 2019,” analysts say, adding that “this will limit the rise in inflation and enable policy-makers to continue to normalise monetary policy”.

Source: Lusa