Mozambique Oil & Gas: Investment in gas to bolster economy to 8-10% annual growth from 2023

Mozambique expects its economy to grow by eight to 10 percent a year from 2023 on, as the export of liquefied natural gas in the Rovuma Basin starts, according to information provided to investors in London yesterday.

“The Coral [Area 4] project is expected to start producing liquid natural gas from 2022 onwards” and the growth in gross domestic product (GDP) is projected to reach 8 to 10 percent in 2023, against three to 4 four percent on average in 2016-2022,” reads the presentation made by the government.

A Mozambican delegation headed by Finance and Economy Minister Adriano Maleiane met creditors to study the restructuring of public debt yesterday, and the figures data were part of the accompanying macroeconomic projection.

One of the government’s graphs points to GDP growth of 9.9 percent in 2023, the figure remaining above 7 percent until 2027.

Until 2023, the scenario is more restrained. In addition to the slower pace of GDP growth, the executive cites the International Monetary Fund (IMF) prediction that, until 2022, the credit granted to the economy will grow on average no more than 2.5 percent, compared to 24 percent in 2012-2015.

The government also expects to achieve a balanced budget, discounting interest expenses, by 2022. The primary balance stood at -4.5 percent in 2017, it reported.

To this end, government is committed to fiscal consolidation, “despite a reduction in international support”, that is, with no financial assistance from the IMF.

The tax measures include “widening the tax base (by removing VAT exemptions on selected products) and introducing new excise taxes,” the statement added.

Likewise, a “rationalisation of salary accounts” is aimed at “reducing subsidies and specific bonuses”, along with limitations on hiring employees and on government subsidies for fuels and communication.

The phasing out of subsidies to public enterprises is also on the list, in line with IMF recommendations. Source: Lusa