Mozambique’s economy is on track for a “strong rebound” in 2020, the International Monetary Fund said on Wednesday, as it urged the government to ensure an expected gas boom benefits all citizens.
The southern African country has sought to become the world’s third-largest exporter of liquefied natural gas since vast offshore reserves were found in 2010.
But low gas prices, combined with a government debt scandal in 2016, delayed exploitation and triggered a prolonged economic downturn.
Gross domestic product (GDP) growth slowed to an average 3.7% between 2016 and 2018 – the lowest since 2000.
“The outlook for 2020 is for a strong rebound in economic activity and low inflation,” said IMF Mozambique mission chief Ricardo Velloso after a seven-day mission in the country.
Real GDP growth is projected to reach 5.5% next year, up from the 2.1% now expected for 2019.
The boost is mainly supported by “post-cyclones reconstruction efforts”, agricultural recovery and the easing of monetary conditions, added Velloso in a statement.
Two tropical cyclones smashed into northern Mozambique in March and April this year, killing more than 600 people and devastating the region.
The IMF provided financial assistance after the storms.
Velloso said “stronger institutions” would be needed to ensure gas revenues trickled down to “the lives of the Mozambican people, playing a significant role in sustainable development and poverty reduction”.
He added that investments in liquefied natural gas projects should boost “construction and other activities”.
Major revenues from gas exports are not expected before 2023.
The government’s inability to stem a wave of attacks by a shadowy jihadist organisation operating in the gas field region has also been a brake on development.
Donors – including the IMF and the World Bank – suspended aid to Mozambique in 2016 after the government admitted it had secretly borrowed $2.2bn which was spent on civil and military ships.
The scandal plunged the aid-dependant country into the worst financial crisis in its history.
Debt soared to 112% of GDP in 2017, forcing Mozambique to suspend its repayments and arousing distrust among investors.
The IMF said the government’s ability to secure additional support from international private creditors remained “critical for public debt sustainability”.
Mozambique is one of the world’s poorest countries, ranking 180 out of 189 in the United Nations’ latest human development index.