IMF Mission Concludes Discussions on New Program with MozambiquePress Release No. 10/125
March 31, 2010
An International Monetary Fund (IMF) mission visited Mozambique during March 15-31, 2010 to conduct the sixth review under the Policy Support Instrument (PSI), the second review under the Exogenous Shock Facility (ESF), and discussions on the authorities’ economic program that could be supported under a successor three-year PSI. Policy discussions were held with Minister of Finance, Hon. Manuel Chang; the Minister of Planning and Development, Hon. Aiuba Cuereneia, the Governor of the Central Bank of Mozambique, Hon. Ernesto Gouveia Gove, and other senior government officials. The mission also held meetings with private sector representatives and members of civil society. In addition, the mission participated in a three-day public seminar in Namaacha on Mozambique’s economic policy challenges and opportunities. It was invited, jointly with World Bank staff, to address the Council of Ministers on the seminar’s conclusions in a meeting on March 25, chaired by the Prime Minister, Hon. Aires Bonifácio Baptista Aly.
Mr. Johannes Mueller, Mission Chief for Mozambique, issued the following statement in Maputo at the conclusion of the mission on March 31:
“The Mozambican economy continues to perform strongly. Economic growth exceeded 6 percent in 2009 and is projected to approach 8 percent over the medium term, driven by strong private and public investment. A recovery in external demand and capital inflows, as well as recent donor assurances on their budget support commitments, should strengthen Mozambique’s balance of payments and further buttress its international reserves. Inflation is projected to around 6 percent over the medium term, although it could temporarily increase in 2010 because of an increased pass-through of international fuel prices to domestic retail prices.
“Mozambique’s strong economic fundamentals and prudent macroeconomic policy mix over the past two decades have provided the necessary flexibility to ease macroeconomic policies in 2009 to respond to the global economic crisis. For 2010, the mission supports the authorities’ intention to begin unwinding the monetary and fiscal stimulus initiated last year, which will help maintain macroeconomic stability and restore the policy buffers that served Mozambique well during the past year. Over the medium to long term, the mission agreed with the authorities’ intention to step up priority transportation and electricity infrastructure investment in an effort to further raise Mozambique’s growth and export potential. However, consistent with the main themes at the three-day seminar in Namaacha, the mission stressed the importance of ensuring that such investment has a high rate of return and helps generate additional private sector investment as well. In particular, it will be important to follow a cautious approach in accessing external non-concessional borrowing so as to preserve Mozambique’s strong track record of macroeconomic stability. The authorities’ economic program that will be supported under the successor PSI will emphasize continued reforms to boost tax administration and public financial management and further strengthen public debt management.
“The IMF's Executive Board is scheduled to discuss the final PSI/ESF program review under the current program and Mozambique’s request for a new three-year PSI in June 2010.”