Construction work is seen opposite a statue of Samora Machel, the first President of Mozambique, and the Cathedral of the Immaculate Conception, a Roman Catholic cathedral in downtown Maputo, Mozambique, September 1, 2019. REUTERS/Siphiwe Sibeko

MAPUTO, Dec 6 (Reuters) – Mozambique sees economic growth picking up to 5.5% next year but its budget deficit widening to 10.4% of gross domestic product (GDP) driven by debt service, public sector wage reforms and election spending, its finance minister said on Wednesday.

Those forecasts compare with 2023 targets of 5.0% growth and a budget deficit of 8.7% of GDP.

Finance minister Max Tonela gave the latest projections in a 2024 budget speech, saying next year’s deficit would be financed by external grants amounting to 5.4% of GDP, foreign loans of 1.9% of GDP and domestic borrowing of 3.0% of GDP.

2024 growth would be driven by extractive industries, agriculture and finance, among other sectors, he said.

The southern African country’s economy has suffered a series of shocks in the past decade, including a “hidden debt” crisis, devastating cyclones and an Islamic State-linked insurgency concentrated in its gas-rich Cabo Delgado province.

Given those blows, “our country continues to follow a remarkable path of growth recovery, with a promising scenario in the medium term”, Tonela said.

(Reporting by Manuel Mucari; Additional reporting by Wendell Roelf in Cape Town; Editing by Alexander Winning and Alex Richardson)