The credit rating agency Fitch Ratings has maintained Mozambique’s credit rating at CCC, but once again downgraded its macroeconomic forecasts due to post-election protests, now projecting a “marginal” economic growth of 2.5% for this year.
In its latest credit review, dated August 1st and reported by Lusa, Fitch states that the growth forecast has been revised to 3.4% for 2026 and 4% for 2027, mainly reflecting the expected resumption of construction on the $20 billion liquefied natural gas (LNG) megaproject by TotalEnergies in Area 1 of the Rovuma Basin, Cabo Delgado. The project has been suspended since 2021 due to terrorist attacks, with work expected to resume in the fourth quarter of 2025.
“Real GDP growth slowed significantly to 2.2% in 2024, down from 5.5% in 2023, mainly reflecting the broad negative impact of post-election violence on economic activity. We forecast that growth will increase only marginally to 2.5% in 2025, due to contraction in the first quarter and the dampening effects of foreign exchange shortages on business activity,” the agency adds.
In February, Fitch downgraded Mozambique’s rating to CCC and worsened its macroeconomic outlook following the 2024 post-election protests. At the time, it had forecast 3.2% growth for this year — now revised downward again.
Fitch justified the February downgrade — confirmed again in August — by citing financial constraints, high risks related to domestic debt servicing, a widening fiscal deficit, elevated public debt, and ongoing political and social unrest, alongside an economic slowdown and uncertainty over foreign exchange reserves and the resumption of gas projects.
The analysts also expressed concerns about the rising budget deficit, following months of social unrest after the October 2024 general elections, as well as the suspension of the IMF support program, and the use of domestic debt swaps, central bank loans, and short-term financing to pay down obligations — stating that “the large financing needs represent a significant vulnerability.”
Furthermore, the fiscal deficit rose to 4.9% of GDP in 2024, up from 2.1% in 2023, mainly due to reduced subsidies and the impact of post-election violence on tax collection.
However, Fitch projects that the deficit will decrease to 3.4% of GDP in 2025 and 3.6% in 2026, mainly as a result of lower expenditures.
Source: Diário Económico
