IMF concerned about growth prospects in Mozambique

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IMF concerned about growth prospects in Mozambique

7:52 CAT | 21 Jul 2017

Fishermen cast their nets beneath the skyline of Mozambique's capital Maputo in this file picture taken November 2009. At Bobole, a bustling refreshment stop on Mozambique's north-south highway, brightly-painted kiosks lined with bottles offer drinks to thirsty travellers while hawkers sell bananas, paw-paws and carrots in a typical African roadside scene. But memories remain fresh of when Bobole lay in the "death corridor" of a civil war that cost nearly one million Mozambicans their lives until it ended two decades ago. In 2013 a series of hit-and-run raids by opposition Renamo gunmen about 600 km (375 miles) further north has rekindled fears of a return to all-out conflict in what has become one of Africa's economic growth stars. To match Insight MOZAMBIQUE-POLITICS/ REUTERS/Mike Hutchings/Files (MOZAMBIQUE - Tags: BUSINESS POLITICS CIVIL UNREST SOCIETY) - RTX11W3A

File photo / A view of Maputo

The mission of the International Monetary Fund (IMF), which visited Mozambique to assess the country’s economic and financial situation, said it was concerned about the growth prospects of the Mozambican economy, which remain difficult, as in 2016 growth was only 3.8%, although it is expected to rise to 4.7% this year.

Inflation remains high despite a projection of a steady decline, according to an assessment by the IMF team, led by Michel Lazare, who visited Mozambique between 10 and 19 January to discuss with the authorities the measures needed to follow up the recent audit report on public sector companies EMATUM, Proindicus and MAM.

The IMF also called for urgent action to strengthen the financial position of loss-making companies and limit the fiscal risk they represent.

The IMF warned of the need for Mozambique to urgently consolidate public finances. Total public debt, mostly in foreign currency, over-indebtedness and the government’s failure to pay foreign debt are among the findings of the 10-day mission to Mozambique.

The mission concluded that the 2018 budget should decisively reduce the fiscal deficit by focusing on eliminating tax exemptions (including VAT), on curbing wage growth, and prioritising the implementation of only essential public investments, thus avoiding further delays.

Source: Macauhub