Moody’s lowers growth forecast for Mozambique economy

3 December 2014

Moody’s credit rating agency lowered its projection for growth of the Mozambican economy this year to 7.5 percent and 8.2 percent in 2015 against estimates presented in October, according to a report issued Tuesday.

In the report, cited by Portuguese news agency Lusa, Moody’s said Mozambique has had remarkable levels of growth, driven by exploration of natural resources and bolstered by technical support provided by the International Monetary Fund, “but the extent of the contribution of these industries to growth will depend on the success of improvements to infrastructure,” seen as essential to ensure that the country gets the most out of its vast natural resources.

Coal exports, for example, “require rail routes linked to major ports with high capacity to process shipments and natural gas exports require construction of expensive natural gas treatment plants.”

The agency noted that improving, and in some cases building from scratch an infrastructure network to explore the “abundant natural resources, poses risks to public finances,” as it leads to “high deficits, despite international donor support,” as well as “uncertainty about the level of return” that the State will be able to get from production of natural resources.

With state debt of 53.1 percent of GDP, Moody’s said the figure is high compared to other countries in the region and the same credit rating and warned that the most likely scenario was for debt levels to continue to rise because of high budget deficits. (macauhub/MZ)