Fitch Ratings has named Mozambique as one of the African countries at risk due to the freezing of foreign aid from the United States, a decision taken during the administration of President Donald Trump.
According to Fitch, although most African economies are in a position to withstand global trade tensions and cuts in international aid, some countries, including Mozambique, are facing serious budgetary challenges. Ethiopia, for example, once received US aid equivalent to 80 per cent of its foreign exchange reserves. Mozambique, Uganda and Lesotho are also considered vulnerable to a possible prolonged suspension of this support.
The agency emphasises that, despite the pressure, countries like South Africa, Namibia and Côte d’Ivoire remain relatively protected. However, for the country, where foreign aid plays an important role in financing social and infrastructure projects, the impact could be significant.
Fitch analysts emphasise that this scenario could compromise fiscal stability and interrupt essential projects, particularly in sectors such as health, education and climate resilience, where external support is crucial.
During a recent webinar, Paul Gamble, head of the sovereign ratings group for the Middle East and Africa at Fitch, emphasised that ongoing reforms in countries such as Nigeria and Seychelles allow them to maintain a positive outlook for their credit ratings. In the case of Mozambique, however, these reforms still face structural obstacles and financial limitations.
Given this context, Fitch points out that African multilateral banks, with majority African capital, can play a more important role in mitigating the effects of the withdrawal of foreign funds. The agency also warns of the growing competition between the US and China for control of strategic resources in Africa, which could have geopolitical implications on the continent.
Source: Reuters
