President Nyusi optimistic on inflation and GDP

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President Nyusi optimistic on inflation and GDP

12:12 CAT | 23 May 2017

A Bola (File photo) / Filipe Nyusi

President Filipe Nyusi expects inflation in Mozambique to fall to 15 percent and gross domestic product (GDP) to grow 5.5 percent in the coming year, although most recent forecasts are not so optimistic.

“We are doing everything to bring inflation down from 25 to 15 percent” and for the pace of GDP growth “to increase from 3.6 to 5.5 percent this year,” the head of state said, quoted by the Mozambican Information Agency.

President Nyusi said in a meeting with nongovernmental organisations on Thursday during his official visit to the Netherlands that the Mozambican government was “making arrangements” with international monetary organisations to correct mistakes made and restore the confidence of international partners.

Helena Afonso, Africa economic affairs analyst at the United Nations, however told Lusa this week that Mozambique’s economic growth forecast had been revised down from 5.5 to around 4 percent.

“The liquidity problem is one of the main risks for the Mozambican economy, and has an impact on the level of foreign debt and on the budget,” she added, noting that “macroeconomic instability will not help the performance of the economy, either”.

In February, the Economist Intelligence Unit forecast Mozambique’s economy to grow by 4.2 percent in 2017, after registering the lowest figure for the last fifteen years (3.3 percent) last year.

The Economist analysts expect inflation, which reached a record high of 27 percent in November last year, to fall, but expected it to remain above 23 percent this year.

The IMF and a group of 14 donors froze direct support to the Mozambican State Budget in April 2016, following the disclosure of debt totalling US$ 2.2 billion contracted between 2013 and 2014 by three state-owned enterprises with foreign banks with guarantees from the government that were not approved in the parliament nor registered in the public accounts.

Source: Lusa