Mozambique: Fitch Believes Mozambique Presents ‘Substantial Risks’

Maputo — The Fitch ratings agency, based in both New York and London, believes that the Mozambican state still presents “substantial risks’ as a result of its high public debt.

As a result of these indicators, the agency decided, on Friday, to keep Mozambique’s rating at CCC+, three levels above Default.

“This reflects high levels of public debt, weak management of public finances, low GDP per capita, weak external finances, weak governance indicators and a challenging security situation’, reads the analysis carried out by Fitch Ratings.

The current rating remains the same as that carried out last February.

In the same analysis, Fitch believes that the country’s economic growth for the current year, which had been placed at 4.5 per cent in the previous assessment, has been revised downwards to four per cent. Likewise, the forecast growth rate for 2025 has been revised from 4.5 down to 4.2 per cent.

The slowdown in growth compared to 2023 reflects, above all, a smaller contribution from the Coral Sul floating LNG Project, operated by the Italian energy company, ENI. The platform, anchored in Area 4 of the Rovuma Basin, off the coast of Cabo Delgado province, started production in November 2022.

However, the Fitch study recognizes that the country has shown robust medium-term growth prospects, supported by the development of the liquefied natural gas (LNG) sector, and by the 456 million dollar three-year Extended Credit Facility agreement signed with the International Monetary Fund (IMF) in 2022 and currently in force.

Fitch, which is one of the three main credit rating agencies (the others being Moody’s and Standard and Poor’s), does not assign an outlook for the evolution of the economy, known as an outlook, to countries that have a CCC rating.