The International Monetary Fund (IMF) projects Mozambican economic growth of around eight percent for 2024, strongly influenced by the production of Liquefied Natural Gas (LNG).
These hopes build on growth of 4.5 per cent in 2022 and expected growth of five per cent in 2023 respectively, higher than the regional average of 3.5 percent in the last two years.
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The data was unveiled in Maputo, by the IMF representative in Mozambique, Alexis Meyer, during the Economic and Financial Forum, an event that aimed to reflect on the prospects for investment and financing the economy.
“For 2024, we project in our base plan an eight per cent growth, influenced by the liquefied natural gas that has started to flow. Even with the various shocks such as natural disasters that have cyclically plagued the country, the good outlook remains”, Meyer said.
According to the IMF, the medium and long term outlook is for higher growth in the country compared to the regional average and should peak in 2027 and 2028 with growth accelerating to above 10 per cent.
The growth is due to the start of natural gas exploration through TotalEnergies’ Mozambique LNG project and the development of ExxonMobil’s project, both in the northern province of Cabo Delgado.
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But there is no certainty about either of these projects. TotalEnergies declared “force majeure” in 2021, after a major terrorist attack against the town of Palma, and pulled out all its staff. Although the security situation in Palma and the neighbouring district of Mocimboa da Praia has greatly improved, there is still no firm date for a resumption of its LNG project. As for ExxonMobil, it has yet to take a Final Investment Decision on its project.
The IMF warns that, on the other hand, the medium and long term outlook indicates that the economy may face challenges due to high public expenditure. It therefore urges the government to work to ensure fiscal sustainability.
“Only a sustainable fiscal policy will allow good levels of growth to be achieved”, Meyer said.
He also warned of Mozambique’s high levels of public debt, arguing that its is urgent “to consolidate public finances to achieve stability”.
For her part, the Deputy Minister of Economy and Finance, Carla Louveira, acknowledged that in the last five years the national economy has suffered endogenous and exogenous shocks due to natural disasters, the Covid-19 pandemic, terrorism in Cabo Delgado, and the Russian invasion of Ukraine.
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“Economic growth in 2023 has been revised upwards to seven percent reflecting the new assumptions on the production capacity of the Coral South LNG Project – South Coral”, she said, referring to the floating LNG platform off the coast of Cabo Delgado, operated by the Italian energy company, ENI. This growth projection is much higher than the IMF’s forecast.