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    World Bank Adds to Mozambique Criticism

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Summary

The World Bank has joined the IMF and UK in publicly criticising Mozambican debt disclosure but remains upbeat about gas export prospects.

by: Mark Smedley

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Natural Gas & LNG News, Corporate, Exploration & Production, Investments, Financials, Political, Ministries, News By Country, Mozambique, Africa

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World Bank Adds to Mozambique Criticism

The World Bank has joined the IMF and UK government in publicly calling for greater transparency in its disclosure of Mozambican government debt but is optimistic about gas export prospects.

Its Mozambique Economic Update report released May 3 includes a special focus on risk.

Mozambique has substantially scaled up public investment over the last few years, the World Bank said, but financing liabilities have accumulated at a rapid pace where due diligence mechanisms to govern them more efficiently have lagged. It cites the 2013 scandal over undisclosed borrowing by state tuna fishing company Ematum, though not the two loans criticised by the IMF.

“It will be increasingly important that the authorities ensure thorough assessment of the country’s fiscal risks and increase transparency through greater disclosure,” said Mark R. Lundell, World Bank Country Director for Mozambique.

If this is done, the Bank believes the country’s economic prospects remain sound – despite the 24% decline in foreign direct investment (FDI), 14% decline in exports, and slowdown of economic growth to 6.3% in 2015. It expects growth to slow further to 5.8% this year, but rise above 7% in 2017.

“Short-term pressures in 2016 point to the importance of rebalancing the external position, rebuilding international reserves, and securing final investment decisions for the development of the Rovuma basin gas fields,” noted Shireen Mahdi, the Bank’s senior economist for Mozambique.

The report, in Portuguese, insists that prospects for Mozambique in the gas sector remain solid, even under present conditions. It expects large related FDI inflows between 2017 and 2020. These will mitigate a widening of the current account deficit from 41% of GDP in 2015 to above 70% in 2018, it says; gas exports are expected to intensify in 2022 and afterwards, and the deficit should decline.

 

Mark Smedley

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