Africa-Press – Mozambique. Mozambique’s government has identified natural disasters, public debt above sustainability limits, inflation and the performance of the State Business Sector, namely three companies, as the main fiscal risks in 2024.
The fiscal risks report, produced by the Ministry of Finance’s Risk Management Directorate and seen by Lusa on Monday, states that the public debt ratio, including contingent liabilities, fell from 109% of Gross Domestic Product (GDP) in 2021 to 82% in 2022, a reduction of 26.8 percentage points.
“However, the country still has debt ratios above the sustainability thresholds recommended for low-income countries,” the report pointed out, with Mozambique’s “main fiscal risks” next year.
“Although the public debt/GDP ratio is decreasing, exchange and interest rates are the main fiscal risk factors for the increase in public debt servicing, which could jeopardise the primary balance,” it reads.
Exposure to the State Business Sector is another of the risks identified for 2024 by the fiscal risks report, which emphasises, however, that this risk “improved considerably” in 2022, reflected in the reduction of the debt stock from 22% of GDP in 2021 to 4% of GDP.
The airline LAM, oil distributor PETROMOC and telecoms operator TMCEL “continue to deserve greater attention from the state due to their fragile financial situation,” the fiscal risks report warned.
The document also pointed to natural disasters as a concern, given the risks of the next rainy and cyclonic season, in 2023/2024, when the National Meteorological Institute (INAM) predicts the occurrence of the El Nino phenomenon, “which could lead to a shortage of rainfall in the south and part of the centre of the country, and high rainfall in the north”.
It also states that although inflation is “slowing down in 2023”, it will continue to “put pressure on public finances” in 2024 “and could reach 8.8% compared to the 7.0% forecast” in the initial planning.
“This effect could put pressure on spending, particularly on goods and services, by 0.4% of GDP,” the document warned.
In addition, the fiscal risks report identified other risks that were not classified as high but which “could possibly impact public finances” next year, namely economic growth, the performance of the financial sector, pension payments and the results of Public-Private Partnerships.
“It is expected that in the medium term, the economy will continue to perform well, with average economic growth of 5.4%. However, risks and uncertainties prevail, which could result in revenue being underestimated by an average of 0.9% of GDP,” the report concluded.
The fiscal risks report is a document that presents the main sources of fiscal risks and mitigation measures “in order to reduce the exposure of public finances to unexpected events”.
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