S&P rates Mozambique

Standard & Poor's said it assigned its B long-term and B short-term sovereign credit ratings to the Republic of Mozambique.

The outlook is positive.

"The ratings on Mozambique balance the constraints of low economic development, high government debt, large fiscal imbalances and weak, although improving, external liquidity against the strength gained from high export-led GDP growth and strong donor support," said S&P credit analyst Mame-Fatou Diagne.

S&P said the ratings are constrained by high, although declining, general government debt, estimated at 82.2% of GDP.

The ratings on Mozambique are supported by high export-led GDP growth and strong donor support. Buoyant exports and debt relief mean that external liquidity is expected to continue improving in the medium term, according to S&P.

"The ratings could therefore improve as a result of fiscal strengthening and a reduction in external vulnerability," Diagne said. "Equally, however, the ratings could come under pressure in the event of fiscal laxity or if political developments lead to a reduction in foreign assistance."

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