The financial rating agency Standard & Poor’s (S&P) considers that Mozambique’s sovereign debt payments are in danger of being delayed until at least the next decade, when the gas projects come on stream.“The major gas projects will provide major financial relief over the next decade, improving economic growth and long-term debt sustainability,” writes S&P in an analysis of the Mozambican economy, in which it warns that “the risks of delays in sovereign bond payments will remain high until production increases substantially.”The S&P note, follows several delays in the payment of local currency bonds last year and a significant increase in the cost of servicing external debt in the coming years.“The refinancing risk in local commercial debt remains high, and external debt payments will increase sharply from 2028 onwards,” following the restructuring of sovereign debt that Mozambique undertook at the end of the last decade, after hidden debts became known that threw the country into financial default and created a crisis of confidence from which it is still recovering.“The government has used the most expensive local debt to cover large budget deficits, and the maturity profile is high; the debt in Eurobonds will start to be amortised from 2028, before the start of production of the gas megaprojects,” which creates additional difficulties, as the Executive will have to pay more for the deficit before receiving more tax revenue from gas exploration.In the note that accompanied the announcement of the maintenance of the CCC+ rating in April, S&P said that “the cost of servicing the external commercial debt, which was historically low, has grown. The government has already started paying the coupon on the Eurobond maturing in 2031, which was previously 5 per cent, equivalent to 47 million dollars a year, and increased to 9 per cent, or 81 million dollars, from 2023 to 2028, rising to 225 million dollars a year between 2028 and 2031.”According to S&P, public debt, one of the indicators most followed by investors to gauge a country’s ability to bear the cost of debt, should slow down to 73.9 per cent of GDP in 2027, from 79.2 per cent last year.“Gas revenues do not compensate for short-term liquidity pressures, so the budgetary and economic outlook will only be beneficial in the long term,” the analysts conclude. (ICE MAPUTO)

Fonte notizia: 360 MOZAMBIQUE