The public deficit is not expected to fall in 2014 because of spending forecasts related to infrastructure projects, as well as the expected rise in public sector wages. The strikes, which broke out in 2013 in the medical sector led to a 15% rise in salaries for this category of public sector workers and further public sector wage demands cannot be excluded. The prospect of the October 2014 national elections (legislative and presidential) is expected to make it difficult to control social spending. Moreover, the current account balance is also expected to worsen. After a slowdown in coal exports in 2013, due mainly to the floods which hit transport despite the rise in production, sales of mining products should again accelerate in 2014. This rise will still not be enough, however, to cover the sharp increase in imports. There is still a great need for capital goods, both for mining operations and for the exploration of the immense gas reserves discovered off the Mozambican coast in 2010. Moreover, rising real wages will increase demand for consumer goods. The current account deficit will exert strong downward pressure on the metical exchange rate, but the depreciation of the Mozambican currency against the dollar is expected to be limited due to the influx of capital into a country whose growth prospects and whose gas potential remain very attractive for foreign investors.
