Floods in northern and central Mozambique last January will adversely affect the country’s Gross Domestic Product (GDP) this year, the Moody’s credit rating agency said Monday.
The floods, which killed 159 people and affected a total of 150,000, will also increase pressure on the government’s position on fiscal matters, exacerbating the upward trend of the country’s debt in recent years, Moody’s said.
According to Moody’s, “State debt levels will continue to rise: since 2011, public debt has grown steadily and this year will probably exceed the forecast of 58.3 percent of GDP, as a result of a higher budget deficit and lower GDP growth.”
The Mozambican agricultural sector contributes about 30 percent of GDP and employs close to 80 percent of the country’s workforce.
“Because use of insurance is relatively underdeveloped in this part of the world, it is expected that a significant share of expenditure in the recovery of damage to public infrastructure falls on the government and damage to private property not covered by insurance will reduce the general levels of wealth of a country whose income per person is already among the lowest in the world,” said Moody’s.
The rating agency also noted that the storms should continue until the end of the rainy season in March, so the country’s investment in industry will be delayed, exacerbating the effect of lower commodity prices on capital expenditure. (macauhub/MZ)