Mozambique's economy to expand annual 24% by 2021, IMF says

January 16, 2016, 7:22am

By Helen Nyambura-Mwaura, Bloomberg
Photo: Bloomberg

Mozambique’s economy may expand by an annual 24 percent from 2021 to 2025 once natural gas production begins, the International Monetary Fund said.

The nation’s Rovuma offshore gas fields in the north will be sub-Saharan Africa’s largest in terms of investment size with the project forecast to soak up more than $100 billion, the Washington-based institution said in an e-mailed report.

“After liquefied natural gas production reaches its peak level in 2028, with the final liquefaction train starting operation, the real gross domestic product growth will moderate to 3 percent to 4 percent,” the IMF predicted.

The government of one of the poorest nations hopes that the gas discoveries, among the largest in a generation, will transform the country, with Standard Bank Group Ltd., Africa’s largest lender by assets, estimating that the economy may swell nine-fold by 2035.

For now, Mozambique first has to navigate it’s way through a cash crunch amid a slump in exports of coal, sugar and cotton that is weighing on growth. The country’s metical weakened 32 percent last year, the most among 24 African currencies tracked by Bloomberg after Zambia’s kwacha.

The amount of gas reserves at Rovuma are estimated at about 180 trillion cubic feet, equivalent to the entire gas reserves of Nigeria, it said.

The southern African nation might become the world’s third-biggest liquefied natural gas exporter after Qatar and Australia once gas production hits its peak.

Mozambique could supply half of its energy needs from natural gas by the mid-2020s, the IMF said, and its tax revenues from the project could reach $500 billion until 2045.