Moody’s placed Mozambique’s credit rating on review for a downgrade due to increasing external pressures on public debt and the devaluation of the national currency, the metical, the credit rating agency said.
Moody’s said the analysis would focus on “the risk that these pressures intensify and cause further deterioration in the government’s and country’s external debt metrics.”
The issue is essentially a drop in foreign reserves, which fell from US$3.2 billion in August 2014 to US$2.5 billion in August of this year, as well as and increase in Mozambique’s public and external debt, which currently accounts for 60 percent and 99 percent of gross domestic product (GDP), according to Moody’s.
Moody’s noted that all Mozambique’s external debt is denominated in dollars and therefore, due to the sharp devaluation of the metical against the dollar, the interest payments and amortisation of he capal are increasing accordingly.
In the recently released statement, the agency also announced it had downgraded the outlook of the credit rating of Empresa Moçambicana de Atum (Ematum), a company that took on a loan of US$850 million dollars until 2020 guaranteed by the State and which still has US$774 million to pay.
Moody’s, which gave no date for completion of the review, also argued that “The capacity of the authorities to respond to these challenges is uncertain because the pressures are strong and the room for maneuver limited.” (macauhub/MZ)