IMF Staff Concludes Visit to Mozambique

IMF News, November 1, 2023

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IMF team led by Mr. Pablo Lopez Murphy conducted discussions with the Mozambican authorities during October 18 to October 31, 2023, on the Third Review under the Extended Credit Facility (ECF) arrangement.
Discussions were described as constructive and fruitful and will continue in the coming weeks aiming to reach Staff Level Agreement.
The team will continue its discussions in the context of the third review virtually and through the Resident Representative Office in Maputo.
Press Release No. 23/371; date on page: November 1, 2023.

Mozambique’s economic growth overall is projected at 6 percent in 2023.
LNG production at the Coral South project has ramped up.
Growth in the non-extractive sector continued slowing, with manufacturing and construction contracting for the fourth consecutive quarter since June 2022.
The outlook for the extractive sector is strong as large LNG projects are expected to resume activities, following sustained improvements in security conditions in the north.

After the fiscal slippages in 2022, the authorities have implemented a strong correction to help put fiscal policy back on track.
The domestic primary balance is projected at 0.8 percent of GDP this year, compared to a primary deficit of 2.8 percent of GDP in 2022.
Fiscal consolidation is set to continue in 2024, in line with the budget proposal sent to Parliament.
Maintaining fiscal discipline in 2024 is emphasized as critical amid tight domestic and external financing conditions.

Headline inflation peaked at 12.1 percent (yoy) in August 2022 and declined to 3.9 percent (yoy) in September 2023.
Core inflation stood at 4.1 percent in September 2023.
The decline in inflation combined with broadly unchanged nominal interest rates means that both the policy and market interest rates have risen to high levels in real terms, generating very tight financial conditions.
With inflation expectations well anchored, fiscal consolidation continuing, and weak non-extractive growth, a gradual easing of monetary policy could be considered.

The government has made progress on structural reforms set out under the program.
A Ministerial Diploma for the taxation of the production of minerals was adopted.
A new e-tax system is in place to collect all taxes.
IMF staff encourages advancing reforms to strengthen governance and reduce corruption vulnerabilities.

The IMF staff team met with Prime Minister Adriano Maleiane, Minister of Economy and Finance Max Tonela, Governor of the Bank of Mozambique Rogerio Zandamela, and other senior officials.
The mission also met with representatives of civil society, political parties, development partners, and the private sector.
The team thanked the Mozambican authorities for excellent cooperation and for frank and constructive dialogue and plans during the mission.

Source: IMF Press Release No. 23/371 (November 1, 2023).