Press Release: IMF Executive Board Completes Fourth Review Under Policy Support Instrument for Mozambique
June 6, 2012Press Release No. 12/206
June 6, 2012
The Executive Board of the International Monetary Fund (IMF) today completed the fourth review of Mozambique’s economic program under the Policy Support Instrument (PSI). In completing the review, the Board approved a waiver for the minor nonobservance of the end-December 2011 assessment criterion on net credit to the government.
The Executive Board approved Mozambique’s second three-year PSI on June 14, 2010 (see Press Release No. 10/242). The IMF's framework for PSIs is designed for low-income countries that may not need, or want, IMF financial assistance, but still seek IMF advice, monitoring, and endorsement of their policies (see Public Information Notice No. 05/145).
At the conclusion of the Executive Board discussion on Mozambique, Mr. Min Zhu, Deputy Managing Director and Acting Chair, issued the following statement:
“Mozambique’s sound policies and strong economic performance are commendable. Economic growth remained buoyant in 2011 and inflation was successfully contained. Mozambique’s prospects for economic growth over the medium term are good, but short-term risks from the global environment should be properly managed.
“The authorities appropriately envisage a countercyclical policy mix for 2012 to sustain economic growth. They aim to keep spending at budgeted levels and pursue an accommodative monetary policy. It will be important to safeguard the recent disinflation gains.
“The authorities’ Poverty Reduction Strategy (PARP) for 2011–14 aims to reinvigorate poverty reduction. The authorities have initiated measures in key areas, including reforms in agriculture and the business environment, continued social and human development, and the expansion of a well-targeted and affordable social protection floor. It will be important to implement these plans vigorously to allow more Mozambicans to benefit from the expected strong economic growth.
“The authorities’ ambitious structural reform agenda requires addressing pressing infrastructure needs. It will be important to maintain the reform momentum to strengthen debt management, investment planning, and public financial management to aid in informed borrowing and project selection decisions, given the authorities’ plans to have greater recourse to nonconcessional resources.
“Proper management of the mining and emerging hydrocarbon sectors, together with a strong tax administration effort, will help enhance fiscal resources for infrastructure and other medium- to long-term development needs. The authorities’ plans to move rapidly in modernizing the fiscal regimes for mining and petroleum and to obtain full EITI (Extractive Industries Transparency Initiative) membership go in the right direction,” Mr. Zhu added.