Mozambique: IMF sees GDP growth of 3.5%-4% this year, 4%-4.5% next

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Mozambique: IMF sees GDP growth of 3.5%-4% this year, 4%-4.5% next

12:43 CAT | 05 Aug 2018

File photo: Lusa

The International Monetary Fund (IMF)said on Friday that it expects Mozambique’s economy to grow by between 3.5% and 4% this year, then accelerate to 4% to 4.5% in 2019.

“The short-term perspective is a gradual and broad recovery in economic activity,” said the head of the IMF’s Africa department, Ricardo Velloso, at a news conference in Maputo at the end of a visit to the country.

In 2017, Mozambique’s gross domestic product grew 3.9%, Velloso noted.

According to IMF forecasts, inflation will this year stay below 6.5%, and in 2019 slow to 5.5%.

Net international reserves will remain at comfortable levels this year and next, Velloso predicted.

The IMF official also expressed the view that the performance of the economy in both years would be “supported by additional reductions in interest rates in view of the favourable inflation outlook”.

For 2019, the IMF expects the exchange rate to remain stable, with one dollar costing between 58 and 60 meticais.

Velloso said that the IMF recommends that the government draft a realistic state budget for 2019, with prudent revenue and expense projections.

In the face of the country’s excessive indebtedness, the IMF has recommended to the Mozambican government to priorities donations and highly concessional credit, arguing for debt guarantees – the main cause of the current debt problems – to be issued only according to strict and rigorous criteria.

Valmonte said the IMF mission visited Mozambique at the request of the Government for a discussion on the preparation of the State budget proposal for 2019.

The IMF is currently providing technical support to Mozambique, which has been grappling with an economic crisis since 2016, amid natural disasters, a fall in the price of raw materials on international markets, and the discovery of loans taken out by public companies – and which were underwritten by the government without parliamentary approval – to the tune of more than €2 billion.

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Source: Lusa