Aug. 16 (Bloomberg) -- Mozambique’s credit rating outlook was cut to negative by Standard & Poor’s after the government revised economic data that signaled a wider current-account gap than estimated.
The long-term foreign currency rating was held at B+, Christian Esters, a Frankfurt-based S&P analyst, said in an e-mailed statement today. The level is four notches below investment grade and on par with the Dominican Republic. Fitch Ratings raised Mozambique’s rating to B+ from B, with a stable outlook, last month.
Mozambique’s government revised 2012 economic data, pushing the current-account gap to 37 percent of gross domestic product, S&P said. The nation’s rating is held back by its reliance on donor aid and foreign investment to drive economic growth and its need for capital flows to fund the deficit, S&P said. Energy companies are investing in the nation to develop the world’s largest gas finds in a decade.
“The negative outlook reflects the potential for a downgrade within the next year if progress on big investment projects slows or if projects seem less likely to generate the growth needed to narrow the external and fiscal deficits,” Esters said. “We could revise the outlook to stable if economic growth remains strong and significant donor inflows continue to fund a material portion of Mozambique’s fiscal deficits, and its balance of payments.”
The economy will probably expand 5.5 percent to 6 percent annually for the next few years, S&P said. The fiscal gap will average about 6 percent of GDP a year through 2016 and government debt will rise to 35 percent of GDP from 32 percent in 2013, the report said.
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