MAPUTO– Prime Minister Carlos Agostinho do Rosario has told the Mozambican parliament, the Assembly of the Republic, that the economy is now recovering, after the crisis of 2016, and the government expects the growth rate to rise to eight per cent a year from 2022/2023.

However, this outlook is entirely dependent on the liquefied natural gas (LNG) projects in the Rovuma Basin, off the coast of the northern province of Cabo Delgado coming on stream as scheduled.

The first of these projects, being implemented by a consortium headed by the Italian energy company, ENI, involves a floating LNG liquefaction unit above the Coral South gas field which will produce 3.3 million tonnes of LNG a year. Oil major British Petroleum (BP) has agreed to buy all of this production. The floating LNG platform will be installed by late 2021, said Rosario, and so the first exports should be in 2022/23.

A second consortium, headed by Houston, United States-based Anadarko Petroleum Corp, will liquefy the gas onshore, at two liquefaction units to be built on the Afungi Peninsula, in Palma district. The government has approved the Anadarko development plan, but production is unlikely to start before 2029.

Rosario, who admitted that gas revenues are a narrow basis on which to build the economy, said:. Our economy cannot be dependent only on the extractive industry. To generate more employment and income, we have to bank on diversifying our economy.”

He added that this means the country will have, in the first instance, to depend more on agriculture in its entire value chain, from production to agro-processing and marketing, in order to capitalise on the job opportunities generated in the various phases.

Banking on agriculture is the right path to increasing income, reducing the cost of living, and increasing self-sufficiency in foodstuffs, which will allow the country to reduce its outside dependence, he said.

He blamed the economic crisis which hit the country in 2016 on such factors as the fall in the prices of some of Mozambique’s key exports, natural disasters such as the floods of early 2015, and the severe drought of 2016, and the suspension of financial aid from 14 donors which used to provide direct support to the Mozambican State budget.

The donors had stopped this support because of the loans of over two billion US dollars to three state-owned companies, illegally guaranteed by the previous government under President Armando Guebuza.

The shocks the Mozambican economy suffered in 2015-2016, the Prime Minster said, led the government to conclude we must continue efforts to improve our productive base through measures to stimulate increased production and productivity, and thus we will be able to export more and generate resources to finance imports.

He said it was also crucial to reduce the budget deficit through the efficient allocation of resources and improved collection of state revenue.

The government was working to restore confidence in Mozambique in international financial markets, and to bring the country’s public debt down to sustainable levels. For the first time, he revealed that the government has negotiated a restructuring of Mozambique’s debt with China and India in order to release resources to finance the priority actions of the government’s five year programme.

Dialogue with the country’s other creditors was continuing , and Rosario believed that this would help restore international confidence in Mozambique.