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In recent years, the IMF has released a growing number of reports and other documents covering economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with government officials, is published at the option of the member country.
This paper presents the staff report on the Republic of Mozambique’s Third Review under the policy support instrument. Mozambique is vulnerable to the global financial crisis and economic slowdown. Lower import prices will help reduce inflation and likely benefit the trade balance. Lower export volumes and reduced private capital inflows are expected to reduce economic growth. The turbulence could also spread to the financial system despite its limited integration into global financial markets. The government is focusing on strengthening policy operations, giving special attention to the tax system and public financial management.
The Executive Board of the IMF has completed the third review under the three-year Policy Support Instrument (PSI) for the Republic of Mozambique. Mozambique continues to weather the global economic turmoil well. Real GDP growth is projected to remain above 7 percent in 2011, benefiting from good harvests, a robust performance in the services sector, and the coming online of new megaprojects in the natural resource sector. The authorities’ economic program under the PSI will continue to emphasize preserving macroeconomic stability and debt sustainability while promoting economic and social development.
Context and policy challenges. Mozambique’s macroeconomic performance remains robust, with strong growth and low inflation. In spite of the heightened risks from an uncertain global outlook, growth is expected to be broad-based in the medium term and boosted by the natural resource boom and infrastructure investment. Short-term policy framework. The main short-term challenge is to maintain the growth momentum while preserving fiscal and debt sustainability. The 2014 fiscal stance is expansionary, and fiscal consolidation needs to be initiated in the 2015 budget to restore prudent fiscal management. While low international prices have dampened inflation, the Bank of Mozambique should stay vigilant and adhere to its medium-term inflation target. Key structural reform priorities include improving VAT and overall tax administration, continuing public financial management reforms, strengthening capacity for transparent public investment management and borrowing, and enhancing the business environment and financial sector development. Completion of the LNG contract negotiations is a critical milestone for the launch of this project, one of the largest in sub-Saharan Africa. Medium-term reforms. Fiscal adjustment over the medium term will be essential to preserve debt sustainability and macroeconomic stability. This requires measures to contain current spending pressures while bringing investment to a more sustainable level. Structural reforms focusing on public financial management, monetary policy tools and banking supervision, and business facilitation should be implemented vigorously to sustain growth and render it more inclusive. With foreign aid likely to decline over the medium term, increased borrowing can provide additional resources for improving both Mozambique’s physical infrastructure and human capital. To ensure the efficiency of investment and borrowing, further strengthening of investment planning and implementation, and debt management are essential.
This topical volume analyzes the impact of the 2008 financial crisis. It considers the origins and explanations of the current crisis, examines the regulatory implications and, with specific focus on developing countries, it provides a strategy for economic growth that can guarantee financial stability in the future.
A study prepared by the United Nations University World Institute for Development Economics Research (UNU-WIDER)
Mozambique showed considerable resilience to the global crisis. The government responded to the crisis by promptly easing macroeconomic policies. The Policy Support Instrument (PSI) provided an effective and flexible framework to guide policies during the crisis, and program performance has been strong. Donor support was temporarily halted over governance concerns, but has resumed. Mozambique’s economic performance and track record of macroeconomic stability over the last decade and a half have been impressive, making the country a prime example of a mature stabilizer.
Borrowing is a crucial source of financing for governments all over the world. If they get it wrong, then debt crises can bring progress to a halt. But if it's done right, investment happens and conditions improve. African countries are seeking calmer capital, to raise living standards and give their economies a competitive edge. The African debt landscape has changed radically in the first two decades of the twenty-first century. Since the clean slate of extensive debt relief, states have sought new borrowing opportunities from international capital markets and emerging global powers like China. The new debt composition has increased risk, exacerbated by the 2020 coronavirus pandemic: richer countries borrowed at rock-bottom interest rates, while Africa faced an expensive jump in indebtedness. The escalating debt burden has provoked calls by the G20 for suspension of debt payments. But Africa's debt today is highly complex, and owed to a wider range of lenders. A new approach is needed, and could turn crisis into opportunity. Urgent action by both lenders and borrowers can reduce risk, while carefully preserving market access; and smart deployment of private finance can provide the scale of investment needed to achieve development goals and tackle the climate emergency.
The audited consolidated financial statements of the International Monetary Fund as of April 30, 2019 and 2018
This publication highlights Mozambique’s remarkably strong growth over the two decades since the end of the civil war in 1992, as well as the major challenges that remain for the country to rise out of poverty and further its economic development. Chapters explore such topics as the role of megaprojects and their relationship to jobs and growth; infrastructure and public investment; Mozambique's quest for inclusive growth; developing the agricultural sector; and building a social protection floor.