The financial rating agency Standard & Poor's (S&P) decided on Friday night to maintain Mozambique's rating at CCC+ and with a stable outlook, warning about the importance of restarting gas exploration projects.

"Mozambique's ability to meet its commercial obligations depends significantly on the resumption and completion of a key liquefied natural gas project led by TotalEnergies," reads the note accompanying the decision to maintain the rating at CCC+ with a Stable Outlook.

In the report, S&P says that "the project has been delayed due to persistent security risks in the Cabo Delgado region, but without a significant deterioration in the security situation, the project could restart in the second half of 2023."

The stable outlook for the rating - which thus remains in one of the lowest places on the rating scale, indicating vulnerability and risk for investors - takes into account the country's current financial capacity and the uncertainties regarding future revenues.

"The stable outlook balances our view on Mozambique's financial capacity to meet its financial obligations over the next 12 months, with uncertainties about when liquefied natural gas production will begin and the associated revenues become available to the Government," reads the detailed explanation of the rating action.

S&P predicts that Mozambique's public debt, one of the highest in sub-Saharan Africa, should be around 90% by 2025, with the debt of public companies representing 25% of the Gross Domestic Product (GDP), of which, 70% is linked to the developments of the natural gas projects, which is why the evolution of the Mozambican economy is deeply dependent on the improvement of security conditions in Cabo Delgado province and the return of TotalEnergies.

S&P forecasts also point to economic growth accelerating from 2.3% in 2021 to 3.8% this year, driven by the strong performance of the extractive sectors, and could grow further to an average of 6% between 2024 and 2025 with the resumption of TotalEnergies construction and the start of gas exploration.

"Long-term growth prospects may improve further if liquefied natural gas is used as an efficient source of energy for electricity generation in Mozambique," the analysts conclude. (Lusa)