Mozambique: IMF projects economic growth of 8% in 2024

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Mozambique: IMF projects economic growth of 8% in 2024

3:06 CAT | 18 May 2023

Photo: Jornal Moçambique

The International Monetary Fund (IMF) expects economic growth in the Mozambican economy of around 8% in 2024, strongly influenced by the exploitation of liquefied natural gas.

Economic prospects build on a growth of 4.5% and 5.0% recorded in 2022 and 2023 respectively, higher than the regional average of 3.5% in the last two years.

The information was made public in Maputo by the IMF Mozambique representative Alexis Meyer-Cirkel during the Economic and Financial Forum, an event whose objective was to reflect on the prospects for investment and financing for the economy.

“For 2024, in our base plan, we project growth of 8%, influenced by the liquefied natural gas that has started flowing. Even with the various shocks such as natural disasters that have cyclically devastated the country, the good perspectives remain,” Meyer-Cirkel said.

According to the IMF, the prospects for the medium and long term point to higher growth in the country compared to the regional average. Growth should peak in 2027 and 2028, accelerating to above 10%.

This growth will be due to the start of natural gas exploitation through TotalEnergies’ Mozambique LNG project and the development of the ExxonMobil project.

On the other hand, the IMF warns that the medium and long-term perspectives indicate that the economy may face challenges due to high public spending. It therefore urges the government to work towards ensuring fiscal sustainability.

“Only a sustainable fiscal policy will allow good levels of growth to be achieved,” he said.

Still in the context of the vulnerabilities of the Mozambican economy, Alexis Meyer highlights public debt, which he considers very costly, and the reason it is urgent for stability to consolidate public finances.

Deputy Minister of Economy and Finance Carla Louveira, who participated in the event, acknowledged that in the last five years the national economy had been prone to endogenous and exogenous shocks due to natural disasters, the Covid-19 pandemic, terrorism in Cabo Delgado province and, recently, the conflict between Russia and Ukraine.

In line with the IMF’s perspectives, the deputy minister said that economic growth for this year had been revised upwards, reflecting new perspectives on the productive capacity of the Coral Sul natural gas project.

“Economic growth in 2023 was revised upwards to 7%, reflecting the new assumptions about the productive capacity of the Coral Sul LNG Project,” Louveira said.

She stated that, in order to maintain economic stability, the government would continue to favour a prudent policy framework of fiscal consolidation through the implementation of the Economic Acceleration Measures Package, which includes fiscal reforms and economic stimulus as well as the development of the private sector.

Source: AIM Moçambique