The consultancy Fitch Solutions believes that Mozambique’s public debt should fall below 100% in 2023, due to the acceleration of the economy, higher gas revenues and the appreciation of the metical next year.
We believe that public debt will slow from 101% of GDP in 2022 to 92.3% in 2023,” write the analysts of this consultancy owned by the same owners of the Fitch Ratings agency.
In a note on the Mozambican economy, sent to investors, analysts wrote that “Mozambique’s debt burden will gradually fall in the coming quarters due to improved economic growth and increased revenue, particularly from the gas sector, which limits financing needs.
Mozambique’s public debt measured against GDP has always been above 100% since 2016, the year the hidden debts scandal was made known, and only came down from 100% in 2019, when it stood at 99%, according to International Monetary Fund data.
In addition to the acceleration of the economy, they add in the text, “the 3.1% appreciation of the Metical expected by 2023, to 61.94 Metical per dollar, also supports the decline in the debt-to-GDP ratio.
Fitch Solutions forecasts that the fiscal deficit will improve from 3.9% this year to 2.5% next year, mainly thanks to gas export revenues.
On November 13, Italy’s Eni exported the first batch of liquefied natural gas produced at the Coral Sul floating platform off Mozambique’s northern coast to Europe, which should have kicked off a new chapter in Mozambique’s economic history, due to the significant increase in tax revenues, which should rise 11.3%, at the expense of a very strong increase in the value of exports, which by 2023 should rise 243%, to $1.8 billion, according to Fitch.
The forecast for Mozambique’s economic growth is 5.3% this year and 6.5% next year.