Mozambique: IMF sees GDP growth slowing to 5% this year, from 6% in 2023

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Mozambique: IMF sees GDP growth slowing to 5% this year, from 6% in 2023

2:24 CAT | 11 Jan 2024

File photo: AFP

-The International Monetary Fund estimates that Mozambique’s gross domestic product grew by 6% last year but expects the growth rate to slow to 5% this year, according to information supporting the approval of the third review of the implementation of the IMF’s 36-month Extended Credit Facility (ECF) programme in Mozambique, consulted on Wednesday by Lusa.

In the report, the IMF estimates that Mozambique’s GDP last year swelled 1.364 trillion meticais (€19.515 billion), and that it will increase to 1.475 trillion meticais (€21.103 billion) in 2024.

It warns of the need for reforms, citing the administration of revenue, the management of public finances, spending on the wage bill, public companies and debt management as fundamental priorities to put fiscal policy on a more solid footing.

With the approval of this third review, releasing a fresh tranche of funding, total disbursements to Mozambique under the ECF programme will amount to around $273 million (€249.2 million). The programme was approved in May 2022, and provides for total funding of $456 million (€416.2 million).

On inflation, according to the IMF, after a 10.3% rate in 2022, consumer price inflation slowed to 3.9% in 2023 but should accelerate again this year, to 6.0%.

State revenues fell from the equivalent of 25.1% of GDP in 2021 to 24.3% in 2022 and to 24.0% last year, the IMF estimates, while foreseeing that they will swell to 25.0% of GDP this year.

Net international reserves are expected to grow from $2.562 billion (€2.345 billion) at the end of 2023 to $2.590 billion (€2.370 billion) in December 2024.

Mozambique’s minister of economy and finance, Max Tonela, said in December that the economy should have grown by around 5% of GDP in 2023 but that growth could reach 5.5% in 2024.

Inflation, according to government forecasts, is expected to be at 7% in 2023 and 2024.

This year’s state budget forecasts expenditure of 542.695 billion meticais (€7.765 billion), an increase of 15% compared to 2023.

Debt costs are seen rising to 54.183 billion meticais (€775.3 million), 3.5% of GDP, while investment spending is to rise to 137.297 billion meticais (1.964 billion euros) in 2024, equivalent to 8.9% of GDP.

The budget estimates state revenues of more than 383.537 billion meticais (€5.488 billion) in 2024, equivalent to 25% of GDP, which will represent a deficit of more than 159.488 billion meticais (€2.281 billion), corresponding to 10.4% of GDP.

According to the government, Mozambique’s GDP is set to grow to 1.536 trillion meticais (€21.975 billion) in 2024.

Source: Lusa