The International Monetary Fund (IMF) has warned of Mozambique's high risk of over-indebtedness, but future prospects point to sustainable debt, thanks to revenue from liquefied natural gas expected towards the end of the decade.
Thibault Lamaire, an economist in the IMF's African department and co-author of the Regional Economic Outlook report for sub-Saharan Africa, told Lusa that the Debt Sustainability Analysis (DSA) has remained unchanged since the financial adjustment programme was approved in May 2022. However, the situation could take a positive turn once the gas exploration projects become operational.
These projects will guarantee Mozambique a substantial volume of tax revenue, which could be channelled into improving the indicators analysed in the DSA. Lamaire stressed that "a high percentage of the projected future debt is linked to the State's participation in the large liquefied natural gas projects". This revenue, expected to be significant, will be a direct boost to the Mozambican economy.
The IMF recently identified eight African countries that need to restructure their debts. São Tomé and Príncipe and Mozambique were mentioned on this list, in view of the DSA.
The forecasts for Mozambique are encouraging. Lamaire expects economic growth of around 6% this year, driven by the extractive industries. Of note is the Coral South project, the first liquefied natural gas project, which began production in October 2022. In addition, the IMF expects two onshore liquefied natural gas projects to begin production in 2027 and 2029, which should have a positive impact on the country's economic growth, reflected in tax revenue and the current account.
These prospects reinforce the idea that, despite the current challenges, Mozambique's economic future could be promising, anchored in the natural riches the country has to offer.
