Mozambican economy to grow again in 2020 after 0.5% contraction this year

7 August 2019

Mozambique’s economy is expected to contract by 0.5% this year and to return to growth in 2020 at the annual rate of 3.0%, according to the latest forecasts from the Economist Intelligence Unit (EIU).

EIU analysts’ forecasts for 2021 and 2022 expect economic growth at a rate of 5.6%, and in the following year, the last one under review, this rate will increase to 7.5%, benefiting from the exploration of natural gas deposits in the Rovuma basin, in Cabo Delgado province.

Referring to the exploration of those deposits, in which US groups Anadarko Petroleum and ExxonMobil and Italian group ENI group involved, the EIU points out that in the case of the Area 1 block, partners have to raise the funding that corresponds to their respective stakes in the project. In the case of state-owned oil company ENH this means 15% or about US$2.3 billion.

Last July, the company announced it would wait for better days or conditions to finance itself on international markets, as it will need a state guarantee, which in the past was granted illegally to two state-owned companies controlled by the intelligence services.

“We believe the government will wait until a possible restructuring of the issuance of Eurobonds [of the Mozambican tuna company Ematum] can be announced, which would improve the conditions currently required of ENH,” it said.

In July, the ExxonMobil group announced the postponement of the final investment decision for the Area 4 block, due to political uncertainties, attacks by Islamic radicals in Cabo Delgado province and concerns over the costs of securing funding.

However, the report mentioned that interest in the country will increase, given the numerous opportunities that will arise, but noted that, given the excess supply in the world natural gas market, the exploration of Rovuma was unlikely to start before 2025. (Macauhub)