Natural gas exports will lead Mozambique’s to grow at higher rates, EIU says

13 February 2020

The Mozambican economy is expected to grow at increasingly positive rates of between 4.2% in 2020 and 9.9% in 2024, the year in which the country may already be exporting liquefied natural gas (LNG), according to the latest report from the Economist Intelligence Unit (EIU) about the country.

In 2019 the economy grew at a rate of 1.9%, due to the combined effect of two cyclones that hit the country, named Idai and Kenneth, according to estimates from the EIU.

The years starting from now, according to the EIU, are expected to see more accelerated economic growth, driven by investments that oil groups will continue to make focused on the start of exploration of huge natural gas deposits in two blocks of the Rovuma basin, A1 and A4.

The document also noted that the current account deficit will increase this year and next, both as a result of increased imports following the cyclones and the increase of capital goods imports related to natural gas exploration, before decreasing in 2024 as gas exports begin.

The EIU recalled that Mozambique has been practically removed from capital markets following the disclosure of the country’s hidden debts, but added that the agreement reached between the government and the creditors of the issue of Eurobonds of Mozambican tuna company Ematum, will improve this relationship.

A relationship which, however, will not return to its previous situation while two outstanding State-backed loans taken on by two public companies and which were deemed illegal remain unpaid.

The Economist Intelligence Unit said Mozambique had been ranked in 120th place out of 167 countries in the Democracy Index, with 3.65 points out of a possible 10, having fallen four places in relation to 2018, when the country scored 3.85 points.

Mozambique is thus classified as a country with an authoritarian regime, as it was in 2018 but worse than in 2017, when the regime was classified as a hybrid, with 4.2 points.

The drop in the Democracy Index, according to the EIU, is due to widespread fraud and violence in the presidential, parliamentary and provincial elections held in October 2019 and a state of political conflict and simmering security issues, coupled with the country’s debt crisis. (macauhub)