IMF praises Mozambique govt for economic diversification

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IMF praises Mozambique govt for economic diversification

11:07 CAT | 12 Sep 2018

Photo: O País

The diversification of Mozambique’s economy begins to take effect.

The International Monetary Fund (IMF) says that the extractive industry is no longer the main source of growth for the Mozambican economy, although it is still significant.

The IMF says that Mozambique’s economy, once dependent on the extractive industry to galvanise growth in gross domestic product (GDP), now sees agribusiness, tourism and financial services play a substantial role.

“We noticed that there is room for the development of other areas. At present the dependency is no longer exclusively on large extractive industry projects, although these still play a very important role,” the IMF’s resident representative in Maputo, Ari Aisen, has said.

To strengthen this diversification, Aisen highlighted the tourism sector as an area warranting greater investment, especially given its great potential. “There is progress in this sector, but we believe that the government can do more,” he said.

In terms of economic prospects, the International Monetary Fund said that the economy is in a “good phase of growth”, with moderate inflation and GDP growth levels.

“The Mozambican economy is gradually recovering thanks to the measures that the government has been adopting for macroeconomic stability, in line with the monetary policies of the Bank of Mozambique,” he said.

The level of growth is still low. In the past, the country’s GDP has reached high acceleration levels, but for 2018, the IMF forecasts growth of around 3.5%, with 4% next year and single-digit inflation.

Private business sector vs. access to credit

Aisen said access to credit by private companies, one of the main complaints of the Mozambican business class, should receive special attention from Filipe Nyusi’s executive.

“If interest rates fall on the market, there will eventually be more access to credit and this will consequently support the country’s economic growth,” Aisen argued in Maputo on Tuesday during an economic briefing on the performance of the financial sector and the macroeconomic outlook.

On the occasion, businesspeople called for a reduction in the interest rate on commercial banking to below 10%.

President of the Confederation of Economic Associations of Mozambique (CTA) Agostinho Vuma said the current interest rate of about 20% made it “impossible” for business to remain viable.

This scenario was slashing business development and damaging the business environment, and the interest rate should be lowered to acceptable levels, Vuma said.

Source: O País