The US credit rating agency Standard & Poor's has lowered its long-term foreign and local currency sovereign credit rating for
However, it has confirmed that the country's outlook is stable and affirmed the 'B' short-term sovereign credit rating.
The company explained that "increased government spending in
S&P commented "
This refers to the Mozambican government's controversial decision to underwrite a loan of
The purchase is being made by the newly established
S&P added that "the government plans to increase expenditure on infrastructure, as well as on its wage bill, election logistics, and maritime security and development, taking government expenditure to a peak of 40 per cent of GDP in 2014".
In its analysis, S&P states "despite a one-off revenue increase from capital gains tax in 2013, we now estimate that the average change in general government debt will be a high 8.8 per cent of GDP over 2014-2017, compared with 4 per cent over 2010-2013".
Whilst warning that the ratings could be lowered further if economic growth slows or elections do not go smoothly, S&P adds that "if the government's ambitious growth agenda leads to significant narrowing of external and fiscal imbalances through better export performance and higher government revenues, we could raise the rating".
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