Restoring growth is Mozambique’s biggest challenge – African Economic Outlook

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Restoring growth is Mozambique’s biggest challenge – African Economic Outlook

3:50 CAT | 24 May 2016

Lusa (File photo)

The main challenge facing Mozambique in the short term is restoring the momentum of growth and ensuring fiscal and debt sustainability, reads the latest African Economic Outlook, which estimates the economy will expand by 6.5 percent.

“The main short-term challenge is to regain the momentum of economic growth at the same time as ensuring fiscal and debt sustainability,” the report released yesterday in the capital of Zambia by the African Development Bank, the Organisation for Economic Co-operation and Development and the United Nations reads.

The reduction in profits from exports and public spending are the two main reasons cited for the slowdown in the growth of gross domestic product to 6.3 percent last year, but the three institutions point to a slight acceleration to 6.5 percent this year.

The report states that Mozambique needs to increase the quality of financial management and public expenditure “to counter growing inequalities,” noting that the number of Mozambicans living in cities will rise from 31 to 40 percent by 2040.

The country, experts say, is facing “economic and political challenges that constitute a defining moment”, bearing also in mind the “low intensity conflict” between the government and the Mozambican National Resistance (Renamo), the main political opposition force.

“The government of President Filipe Nyusi faces many challenges,” notes the AEO, citing the example of negotiations with foreign investors in the country’s mega projects, which “are taking longer than anticipated”, particularly in the liquefied natural gas sector.

Source: Lusa