Moody's on Friday upgraded the outlook for Mozambique's economy from Stable to Positive, but maintained the rating at Caa2, the fourth-worst level of sovereign credit analysis, implying "very high credit risk.

According to a note released by the rating agency, cited by Lusa, "the motivations for the positive outlook include the forecasts of comprehensive improvements in the country's credit profile, led by liquefied natural gas production, and the government's efforts to strengthen public governance, which may improve political effectiveness over time from the current very weak levels."

In this analysis, the analysts point out that the next 12 to 18 months "will be critical for Moody's to assess "whether natural gas production levels and the government's management of future revenues will lead to sustainable improvements in the country's fiscal and budgetary robustness."

In this sense, the maintenance of the Caa2 rating is based on "persistent credit weaknesses, which suggest that there is still a high risk of default", and are related to "high public debt, exposure to currency risks, and vulnerability to multiple sources of shocks, such as security and weather.

However, Moody's upgraded the local currency sovereign credit quality by one notch, from Caa1 to B3, due to "improving macroeconomic stability."

For Moody's analysts, natural gas production in the north of the country will be fundamental to Mozambique's evolution.

"Moody's anticipates that in time these efforts, particularly if they were accompanied by an International Monetary Fund program, may improve Mozambique's institutional capacity," reads the note accompanying the rating decision.