Mozambique | Public debt in 2018 is expected to exceed GDP

Mozambique’s public debt is expected to reach 102.5 percent of gross domestic product (GDP) at the end of the year, with the economy likely to grow by 3.5 percent, Fitch Ratings said in an analysis report on the country’s economy. For 2019, Fitch Ratings forecasts economic growth of 3.7 percent.

The agency’s analysts said in the document that “the budget deficit will reach 5.7 percent of GDP, which rises to 6.9 percent when the arrears are considered, gradually rising to 7.3 percent in 2019 and 7.8 percent by 2020, reflecting the still low growth and pressure on spending due to the electoral cycle of this and next year and to decentralization in 2020.”

Fitch Ratings forecasts that “public debt will increase, reaching a peak in 2022, when the debt-to-GDP ratio will reach 119 percent due to slower economic growth expectations and limited fiscal consolidation.”

The biggest risks, the agency’s analysts conclude, are “a faster depreciation of the exchange rate than expected, higher deficits and delays in large natural gas exploration projects.” MDT/Macauhub