The financial rating agency Fitch decided Wednesday to keep Mozambique's `rating` at CCC due to concerns over debt, external financing and the lack of judicial resolution of so-called `hidden debts.

"Mozambique's `rating' reflects the risks of high debt levels to debt sustainability, limited sources of financing, coupled with the high budget deficit and need for external financing, and the lack of resolution of public sector debt," Fitch Ratings analysts write.

In the note accompanying the decision to keep the country's `rating' at CCC, well down the scale of non-investment recommendation, or `bad' as it is generally known, Fitch writes that "the impact of the pandemic and security risks increase pressure on near-term public spending" and adds that, "in a context of limited funding sources, this may have a negative impact on medium-term growth prospects and increase challenges on debt sustainability."

Mozambique's public debt to GDP ratio, one of the highest in sub-Saharan Africa, "increased to 121% of GDP, largely reflecting the impact of the 18% depreciation of the metical," reads the note, which recalls that 83% of public debt is held in foreign currency, mainly dollars, and is therefore significantly affected by changes in the exchange rate of the national currency, the metical.

Analysts estimate that the public debt ratio will decline to about 120% by 2023 due to fiscal consolidation, economic recovery, moderate exchange rate depreciation, and indebtedness of the National Hydrocarbons Company to finance its participation in the mega natural gas exploration projects in the north of the country.

National GDP, after contracting by 1.2% in 2020, is expected to grow by 1.8% this year, accelerating to 3.4% and 4% in the next two years, approaching the growth trend recorded before the pandemic.

However, they warn, "economic growth prospects are sensitive to adverse weather events, pandemic developments, and the situation in major export markets.

In explaining the maintenance of the sovereign credit quality opinion at CCC, the second worst after a Financial Default and indicating a "real possibility of default" on financial obligations, Fitch further suggests that a financial support program from the International Monetary Fund could act as "an anchor for policy" and could also "improve financing conditions."

Mozambique on Wednesday recorded 32 deaths, the highest daily number of covid-19 deaths, plus more than 1,700 cases of infection, bringing the total number of deaths to 1,190 and the number of infections to more than 103,000, with 77% already cured.