A group of researchers from South Africa's Rand Merchant Bank (RMB), part of the Firstrand Group, like FNB, has concluded that most African governments will still be devoting efforts to deal with the challenges posed by the covid-19 pandemic, while still boosting economic growth, in 2022.

"Based on the most optimistic scenario for Mozambique, increased government spending is expected in sectors such as construction - with increasing gas production and mining activity; more extensive vaccination coverage and the reopening of borders," says Daniel Kavishe, RMB Economist.

"Growth of over 4% can be expected over the next few years - our base case scenario points to a rise in the order of 4.1% in 2022, before reaching 5.1%," adds Kavishe, making an analysis coincident with that of Economist to RMB, Daniel Kavishe.

Regarding Coral LNG operations, in Cabo Delgado province, the ENI oil company expects to start production and export of liquefied natural gas this year.

The offshore operation was not affected by the insurgent attacks in that northern Mozambican province, which allowed the oil company to maintain momentum despite the impact of the pandemic.

ENI's floating platform is expected to produce 3.4 million tons of LNG annually. According to Kavishe, "LNG production should reach its maximum capacity in the next two or three years, operations whose tax revenues should help strengthen the government's fiscal plans."

Besides the sectors mentioned, there are other sectors of the economy in which growth is expected in 2022, namely agriculture and construction. The latter should be supported by the expansionary budget proposed by the government. And on the other hand, the agricultural sector shows growth prospects due to the forecast of constant rainfall throughout the region.

In this sense, FNB Mozambique guarantees that it will support the country's growth initiatives such as operations linked to production and service provision.

"Our central focus will be on established clients in the Logistics, Agriculture and diversified Industry sectors, without neglecting the importance of other sectors in the value chain" said Janine Goosen, Director of Corporate and Investment Banking at FNB Mozambique.

Regarding the national budget and government financing, the RMB notes an expected increase in the budget deficit of around 12.5% of GDP in 2022.

The increase in the fiscal deficit is a cause for concern as most regional economies seek fiscal consolidation over the next few years by eliminating unnecessary spending and ensuring controlled debt.

The RMB also predicts a devaluation of the metical to levels around 65.9 against the US dollar over 2022.

Despite the expected improvement in revenues derived from Coral LNG exports, imports continue to rise nationwide, resulting in a widening current account deficit.

"Demand for foreign currency on the market is expected to outstrip supply in the near future, and this remains one of the main challenges for everyone. However, we have an International Trade operations and FX flow team that is always attentive to foreign currency liquidity needs," adds Janine Goosen.