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Mozambique: careful approach required to fully utilize gains from gas projects

At a time when Rovuma’s natural gas projects are seen as a lifeline for the country, Standard Bank, one of the leading and reputed international banking groups, draws attention to the need for a careful approach to the subject.

The bottom line, according to the SB, is the urgency of government officials to take courage and adopt a strategy on what they want to gain as a result of exploiting the extraordinary quantities of natural gas in the Rovuma basin.

Specifically, Standard Bank recognizes that the Final Investment Decision for the area 1 natural gas project has the potential to raise the uptrend and accelerate GDP growth well before the start of LNG exports. However, this will only happen “if political measures are taken to address a range of fiscal vulnerabilities.”

Anadarko is expected to invest in the project of area 1, a total of USD 25 billion, after the announcement of the approximately 5 billion ENI, operator of area 4.

The SB states that there is still a need to ensure greater and bolder reforms to facilitate the conduct of business, an action that can make paired with the gains of the gas in the positive incidence for the recovery of the economy.

“Anyway, it seems that any positive effect of the spread of investment in natural gas megaprojects can only be fully realized if there is a clear strategy to get Mozambique out of the current” mess”- says Standard Bank ALMM (African Local Markets Monthly), a monthly review of local African markets.

On the other hand, the analysis believes in exchange rate stability until the end of the year, although in recent days we are seeing a slight decline of the Metical in relation to the American currency. The bank thinks that the variation throughout the year will not run too far in the 60 Meticais for every dollar unit.

“We maintain that, given moderate economic activity and relatively low import demand, economic fundamentals do not support a sustained increase in Metical. Our view is that the USD / MZN will spin around the 60.0 mark this year “- refers to Standard Bank’s monthly publication.

Source: Devdiscourse

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