Fitch Ratings has downgraded Mozambique's long-term foreign and local currency issuer default ratings (IDR) to 'B' from 'B+', but affirming its short-term IDR at 'B'.
The downgrade of the country’s long-term IDRs reflects that Mozambique’s fiscal profile has deteriorated sharply over the past year, reflecting high budget deficits, a rapid rise in public debt, volatile government revenue and a widening wage bill.
The new government is making efforts to rein in capital expenditure but fiscal consolidation is expected to be gradual, highlighting in part difficulties in increasing the tax base.
