africa Banking Currency Economy Finance Mozambique

Mozambique reserves break record at US$3.9B

Standard Bank’s Economic Studies office said on Sunday that Mozambique’s foreign currency reserves had risen to US$3.9 billion, its highest ever.

“The recent cash inflow of US$880 million in capital gains taxes from Occidental-Total’s purchase of Anadarko’s assets in the Rovuma basin, has helped boost foreign currency reserves to its highest-ever figure – US$3.9 billion [€3.5 billion], representing more than six months-worth of imports,” analysts write.

In their monthly report on African financial markets, the Standard Bank economic analysts write that “the current level of foreign currency reserves should support the metical despite economic activity remaining below potential.”

Standard Bank predicts a “slow economic recovery” for Mozambique, with GDP growing 2.5% this year and 3.7% in 2020, “not much higher than the estimated 3% population growth rate and lower than the International Monetary Fund forecast, which points to a 5.5% expansion in 2020.”

Primary sector activities “remain below potential, and investments in the liquefied natural gas sector will only intensify in the second half of next year,” analysts argue, explaining the difference in estimates between themselves and the Fund.

By 2020, an “IMF financial support programme” will be possible, now that the deal with sovereign debt lenders has been finalised and rating agencies have pulled the country out of default, analysts say, concluding that it “would support a breakthrough in structural reforms and a strengthening of governance on the eve of a predictable ‘boom’ in the gas sector.”

Source: Lusa via Club of Mozambique

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