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Mozambique juggles new interests and old problems

Thursday, January 22, 2015

Subject

Mozambique's new government.

Significance

President Filipe Nyusi on January 17 unveiled his first cabinet. The line-up marks a break with the administration of former President Armando Guebuza, but balances competing factions within the ruling FRELIMO party. The new government's main focus will be to turn offshore natural gas discoveries into liquefied natural gas (LNG) exports. Declines in FRELIMO's electoral support indicate pressure to demonstrate more inclusive benefits than has been the case with previous mega-projects.

Impacts

  • Lower prices for traditional (agriculture) and megaproject exports (coal, aluminium) will continue; last year exports fell by 8.4%.
  • With mining under stress, companies may delay production expansion planned to take place after the completion of the Nacala railway.
  • For the short term, fiscal risks are greater than debt stress -- particular given 2014 election-related spending.
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