Mozambique's election winner faces financial strain
The economy of Mozambique will be impacted by the worsening cyclones and insecurity as well as delays to gas projects, high debt levels, and delayed gas projects.
Daniel Chapo, the candidate of the ruling party, is currently the frontrunner. However, there are also three other candidates who want to succeed Felipe Nyusi in the role of president for the nation.
Mozambique is under pressure to adopt fiscal discipline due to rising borrowing costs, especially as it has run out of options for refinancing its debt. Its debt is almost as large as its annual GDP.
Gabriel Muthisse said that the debt in the country was soaring. "Debt servicing is (diverting)...resources that could be used to finance the real economy."
The yield on Mozambique’s international bonds due in 2031 is close to 13 %.
Credit Suisse is still struggling to recover from a decade old "tuna bond" scandal, where loans to a fishing vessel went missing. This led to Mozambique defaulting on its debt, and the International Monetary Fund suspending lending.
The Swiss bank reached a settlement out of court last year.
Kevin Daly is the portfolio manager of Abrdn which holds Mozambique’s 2031 international bonds.
Mozambique signed a $456-million deal with the IMF on May 20, 2022. However, its programme will expire next year. It will need to be renegotiated.
Thys Louw is a portfolio manager for global asset manager Ninety One. But islamist violence has slowed the development of some Africa's largest gas fields by TotalEnergies, ExxonMobil and others.
Total insists that it remains committed to its investors, but the enthusiasm of these investors is declining.
Tshepo Nicube, Head of International Coverage at Absa Corporate and Investment Bank said: "There was a period when everyone was eager to visit Mozambique."
"Now, it's all about: "Let's see what happens." (Reporting from Kopano in Johannesburg and Duncan Miriri, in Nairobi. Additional reporting from Libby George in London and Karin Strohecker; editing by Tim Cocks & Christina Fincher.
(source: Reuters)
