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Home Africa

S&P affirms Mozambique’s ratings, takes it off CreditWatch

FurtherAfrica by FurtherAfrica
August 8, 2016
in Africa, Banking, Credit Rating, Economy, Finance, Mozambique
Reading Time: 1 min read
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Mozambique: Govt Seeking to Ensure Price Stability
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On 5 August 2016, Standard & Poor’s (S&P) Global Ratings affirmed its ‘CCC/C’ long- and short-term foreign currency and ‘B-/B’ long- and short-term local currency sovereign credit ratings on the Republic of Mozambique.

It also removed the ratings from CreditWatch, where they were placed with negative implications on 27 May after previously undisclosed debt was announced. The ratings all have a negative outlook.

The hidden debt led to a lending freeze from several multilateral donors, as well as the suspension of a $283 million Standby Credit Facility from the International Monetary Fund (IMF).

S&P said that the freeze, combined with weak commodity prices, led to a significant weakening of the nominal Mozambican metical (MZN) exchange rate and a sizable decline of foreign exchange (FX) reserves—ultimately leading to forecasts of weak economic growth this year and next.

“We now expect Mozambique will post a fiscal deficit after grants of seven per cent of GDP in 2016, before gradually declining to 4.5 per cent of GDP by 2019,” S&P said, adding that general government debt is also expected to hover over six per cent through 2019.

“That said, Mozambique’s fiscal performance could beat our expectations if the government reaps capital gains taxes on the sale of a gas stake from one international gas company to another,” S&P said.

S&P said that GDP growth is likely to pick up again in 2017 and 2018, on the back of gas sector investments that are currently being negotiated.

Source: CPI Financial

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Tags: credit agencycurrency devaluationmeticalMozambiquesovereign debtSovereign Loanモザンビーク莫桑比克
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