Mozambique: Recovery shows notable growth – minister

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Mozambique: Recovery shows notable growth – minister

12:32 CAT | 07 Dec 2023

File photo: Lusa

Mozambique’s minister of economy and finance, Max Tonela, said in parliament yesterday that Mozambique “is on a remarkable trajectory of growth recovery” and expects to close the year with a 5% increase in Gross Domestic Product (GDP).

“Despite the enormous international and domestic challenges, especially the prevalence of an unfavourable and unstable geopolitical environment, combined with the adverse impact of climate change and the effects of terrorism in Cabo Delgado province, our country continues to follow a remarkable path of growth recovery, with a promising medium-term scenario,” said Tonela.

“For this year, there is a prospect of economic growth of 5%, in line with the plan approved by parliament, and there is an even more optimistic projection of 5.5% for 2024,” Max Tonela said during the presentation of the proposal for the Economic and Social Plan and Budget (PSOE) for 2024.

The minister pointed out that after the Covid-19 pandemic in 2020, GDP saw real growth of 2.3% in 2021 and 4.1% in 2022, as opposed to the negative record of 1.2% in 2020.

He said that inflation would fall to single digits this year, reaching 7%, after 10.3% in 2022, and is expected to remain in single digits in 2024.

The fall in prices is influenced by the stability of the metical against the main foreign currencies, said the minister of economy and finance.

“This trend is also driven by the expectation of a slowdown in fuel prices on the international market, especially the price of a barrel of Brent, which has contributed to the stability of domestic prices, although now conditioned by the dynamics of the Israeli-Palestinian conflict,” he emphasised.

Max Tonela said that the economic growth forecast for next year will be supported above all by the extractive industry sectors (18%) and the expected performance in agriculture (5.7%), finance (3.5%), transport (5.5%), electricity and gas (3.5%) and construction (37%).

The PSOE proposal points out that Mozambique’s exports of goods will reach $9.7 billion (€9 billion) in 2024 and net international reserves of more than $2.2 billion (€2 billion).

“It’s worth noting that the level of net international reserves will be comfortably sufficient to cover import needs for three months,” emphasised Max Tonela.

The proposal presented to parliament on Wednesday foresees spending of 542.69 billion meticais (€7.79 billion), an increase of 15%.

According to documents supporting the proposal, the total expenditure budgeted for the state corresponds to 35.3% of the GDP expected for next year. State spending for this year has been budgeted at 472.122 billion meticais (€6.781 billion), corresponding to 35.% of Mozambique’s expected GDP in 2023.

With the favourable votes of the majority of the Front for the Liberation of Mozambique (Frelimo) guaranteed, the budget proposal for next year has the largest slice of expenditure under wages and salaries, which grows to 191,747 million meticais (2,756 million euros), equivalent to 12.5% of GDP, while debt charges increase to 54,183 million meticais (778.9 million euros), 3.5% of GDP.

The proposal estimates state revenues of more than 383,537 million meticais (5,514 million euros) in 2024, equivalent to 25% of GDP, which will represent a deficit of more than 159,488 million meticais (2,293 million euros), corresponding to 10.4% of GDP.

Mozambique’s GDP is expected to grow to 1.536 trillion meticais (€22.084 billion) in 2024, which corresponds to an expected economic growth of 5.5%.

Source: Lusa