Bank of Mozambique cuts interest rates
Maputo. File photo: Macauhub
Mozambique’s government is set to delay major economic reforms until after the general elections scheduled for October, because of the lack of the kind of policy framework that would be provided by an IMF agreement, according to the Economist Intelligence Unit.
Policies will be made on an ad-hoc basis, with major reforms delayed until after the elections, even if the financial crisis will force some politically sensitive measures, such as a gradual phasing out of subsidies and the privatisation of some state assets, EIU analysts write in the note to clients, which Lusa has seen.
According to the note, the government’s spending priorities will be populist and motivated by the need to maintain living standards in order to avoid social unrest in the run-up to the presidential, legislative and provincial elections that are slated for October.
As a result, the EIU argues, the government will for the time being continue to expand its subsidy programme, tax exemptions and the large public payroll, inflating the budget deficit this year to some 8.1% of gross domestic product this year.Source: Lusa