Fitch maintains rating on Mozambique’s debt with a stable outlook

26 August 2011

Maputo, Mozambique, 26 Aug – Fitch Ratings maintained its “B” rating on Mozambique’s long term debt in foreign currency, and sees a stable outlook for the Mozambican economy.

“Historically, Mozambique has posted impressive growth and prudent macroeconomic management against a low ‘per capita’ income of just US$436 in 2010, which compares to an average of US$2,411 for countries with a B rating and a weak private sector and investment climate, Fitch said in a statement.

The specialists from the ratings agency also said that the dynamics of economic growth remained string, estimating GDP growth of between 7 percent and 8 percent for the 2011-2013 period, which will be bolstered by investment in the mining, infrastructure and agricultural sectors.

Fitch gives the example of the outlook for the coal sector, “which is particularly brilliant.”

Mozambique has around 2.5 billion tons of coal reserves yet to be explored which will likely start being exported in 2011. Fitch said that this situation could even, “drive the country to become the largest coal producer in Africa.”

In terms of monetary and budgetary policy, specialists from Fitch consider that the country is in a robust position. “The firm policies of the Bank of Mozambique in 2010 contributed to inflation falling to 7.7 percent in July, the lowest figure for the last 15 months,” said the team of three analysts that drew up the report.

In terms of the budgetary situation, Fitch’s analysts estimated that debt would increase to 42.3 percent of GDP by 2013, as compared to 39.3 percent in 2010, as a result of growth of investment in public works and funding of social security networks for citizens. (macauhub)