Numbers & Statistics

IMF Staff Concludes Visit to Mozambique

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Via IMF (Den Internationale Valutafond)

IMF Staff Concludes Visit to Mozambique







November 13, 2019







End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.









An International Monetary Fund (IMF) staff team led by Ricardo Velloso
visited Maputo during November 6–12, 2019, to take stock of recent economic
developments and update macroeconomic projections.

At the end of the mission, Mr. Velloso issued the following statement:

“As a result of Tropical Cyclones Idai and Kenneth, real GDP growth
decelerated to 2¼ percent (year-on-year) in the second quarter of 2019,
affected by a weak performance in agriculture. Inflation declined to 2¼
percent (year-on-year) in October, from about 5 percent a year earlier, as
tight monetary conditions more than offset the supply shock to prices
induced by the cyclones. The exchange rate has been broadly stable; and
international reserves at the Bank of Mozambique increased to about US$3.9
billion at end-October, covering 6¾ months of next years’ projected
non-megaprojects imports.

“The outlook for 2020 is for a strong rebound in economic activity and low
inflation. Real GDP growth is projected to reach 5½ percent in 2020, from
2.1 percent projected for 2019, supported by post-cyclones reconstruction
efforts, a recovery in agriculture, and economic stimulus from further
gradual easing of monetary conditions and clearing of domestic payments
arrears to suppliers. Construction and other activities should also be
boosted by investments in the liquefied natural gas (LNG) megaprojects.
Inflation is projected to remain low, increasing slightly to 5 percent at
end-2020, from 3 percent at end-2019.

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“Consistent with the advice laid out in the latest Article IV consultation,
the mission recommended gradual fiscal consolidation over the medium term,
with a view of eliminating the primary fiscal deficit by 2022, while
protecting or increasing well-targeted social spending. Financing should
continue to rely on external grants and highly concessional loans given the
high level of public debt. The mission welcomed the significant progress on
clearing domestic payments arrears to suppliers and noted that, despite
some progress, additional efforts will be needed to address the VAT refund
backlog.

“The mission noted that there is ample room for the Bank of Mozambique to
continue easing monetary policy given well-anchored inflation expectations,
provided this easing is supported by a prudent fiscal policy stance. It
welcomed the Bank of Mozambique’s strong commitment to maintain a flexible
exchange rate and safeguard financial sector stability.

“The mission welcomed the authorities’ comprehensive diagnostic of
governance and corruption challenges in Mozambique, which was published in
August and was supported by IMF technical assistance. It encouraged the
Government to implement the reforms under the roadmap outlined in the
report.

“The mission welcomed the ongoing efforts by the Attorney-General’s Office
to bring accountability to the issue of the previously undisclosed loans,
as well as the Government’s initiatives to fight corruption and strengthen
transparency.

“The mission noted that the recently-concluded Eurobond exchange lowered
interest payments and extended maturities broadly in line with the baseline
scenario in the debt sustainability analysis published in April. However,
as also noted in that analysis, gradual fiscal consolidation and success in
the Government’s strategy to secure additional debt relief from
international private creditors remain critical for public debt
sustainability.

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“The mission welcomed the progress in the development of the LNG
megaprojects in the northern province of Cabo Delgado. It reiterated the
importance of building stronger institutions to help ensure that the fiscal
revenue from such projects transform the lives of the Mozambican people,
playing a significant role in sustainable development and poverty
reduction. In this context, the mission welcomed the Government’s intention
to save part of the capital gains tax—from the sale to Total of
Anadarko/Occidental’s share in one of the projects—into an embryonic,
future sovereign wealth fund.

“The mission held fruitful discussions with President Filipe Nyusi, Prime
Minister Carlos do Rosário, Minister of Economy and Finance Adriano
Maleiane, Minister of Mineral Resources and Energy Ernesto Max Tonela, Bank
of Mozambique Governor Rogério Zandamela and other senior government
officials, private sector, and the donor community. The mission thanks the
authorities for their availability and cooperation as well as the
arrangements made to facilitate our work.”


IMF Communications Department
MEDIA RELATIONS

PRESS OFFICER: Lucie Mboto Fouda

Phone: +1 202 623-7100Email: MEDIA@IMF.org

@IMFSpokesperson








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