Crisis triples triples financing

The African Development Bank (AfDB) on Thursday said that the Covid-19 pandemic has tripled Mozambique’s financing needs, to 8.2% of GDP, and could lead to an economic recession of 2%.  the full report HERE.]

According to the AfDB’s African Economic Outlook 2020, “the effects of the COVID–19 pandemic and the attendant lockdown are expected to reduce Mozambique’s economic growth rate to 1.5% in the baseline scenario, assuming the pandemic eases by July  Output could contract by 2.0% in the worst-case scenario, assuming the pandemic persists until the end of the year.”

In the document, which revises down initial estimates from January, the AfDB said that Mozambique’s funding needs have tripled, leading to a deficit in public accounts that could reach 8.2% if the pandemic lasts until the end of the year.

“The fiscal deficit would widen to 8.2% of GDP in 2020 in the worst-case scenario against 4.5% initially planned in the budget. Even under a more conservative baseline scenario, the deficit will be more than triple the 2.2% recorded in 2019,” reads the document, The AFDB report further states that “the impact on revenues is mainly coming from lower commodity export revenues and slowdown in economic activity due to closure of businesses and limitation of transport activities during the lockdown.”

“On the external position, a collapse in commodity exports would worsen the current account deficit to a projected 62.3% of GDP in the baseline scenario, with potential of further widening to 67.2% in the worst-case scenario,” the  report adds.

“Deceleration in growth would be driven by slowdowns in construction, tourism, and transport and by outflows of foreign direct investment. Inflation is expected to rise above 6.6% following the closing of borders and the potential credit crunch on the productive sector, which could drive up prices of goods, particularly food,” reads the report.

“Domestic supply is already insufficient to meet growing demand, and the instability disrupting logistics in the centre and north of the country may add further pressure on food prices, fuelling inflation.”

Africa’s total of Covid-19 cases on Wednesday surpassed the half-a-million mark. The death toll rose to 11,955, up 333 in the last 24 hours, according to the latest figures.

According to the African Union’s Centre for Disease Control and Prevention (Africa CDC), the number of those infected has risen to 508,086, up 16,336 in the last 24 hours, while the number of those recovered on Wednesday was up 8,702 to 245,068.

Mozambique hasd, by Wednesday, 1,071  infected and eight dead.

The first case of Covid-19 in Africa emerged in Egypt on February 14, and on February 28, Nigeria became the first country in sub-Saharan Africa to register cases of infection.

The Covid-19 pandemic has already claimed more than 545,000 lives and infected more than 11.9 million people in 196 countries and territories wordlwide, according to a report by the French agency AFP.

The disease is transmitted by a new coronavirus detected in late December in Wuhan, a city in central China.