Press Release No. 08/28

Press Release: Statement by IMF Executive Directors at the Conclusion of their Visit to Mozambique

February 22, 2008

A mission of Executive Directors of the International Monetary Fund (IMF) comprising Messrs. Age Bakker, Ambroise Fayolle, Peter Gakunu, Huayong Ge, Aleksei Mozhin, and Ms. Miranda Xafa issued the following statement today in Maputo at the conclusion of its visit to Mozambique:

"We are grateful for the opportunity of our visit to Mozambique and we thank President Guebuza, Prime Minister Diogo, Minister Chang, Governor Gove, and other senior officials for their very warm hospitality as well as for very productive discussions. Our visit to Mozambique has offered us a unique opportunity to hold discussions with a wide range of stakeholders, including representatives of the public and private sectors, the civil society, and development partners.

"We congratulate the Mozambican authorities on their strong commitment to sound economic policies and for an impressive economic track record over the last years. Prudent fiscal and monetary policies during 2007 have kept inflation under control, albeit somewhat higher than programmed due to high food and international oil prices. Real GDP growth averaged about 8 percent. Extensive structural reforms in public financial management, with the implementation of a public financial administration system (e-SISTAFE), and efforts to improve the business environment were key elements of an ambitious economic program supported by the PSI. Net international reserves are expected to remain at a comfortable level, mainly on account of an increase in net capital inflows. The authorities' commitment to reforms is evidenced by the satisfactory implementation of the 2007 program, as was recognized during the Executive Board on Mozambique last December.

"We acknowledge that the country still faces major challenges. Despite the authorities' efforts, poverty levels are still high, and there is a need to develop policies towards employment generation and improvement of income distribution within the different regions of the country. We encourage activities towards reducing the cost of doing business and support the development of small and medium enterprises in the economy, and the diversification of the structure of the productive sector in Mozambique. Extending financial services and access to rural areas, and removing infrastructure bottlenecks, including by ensuring energy security, would be other important steps towards supporting high growth and significantly reducing poverty. Fiscal transparency is another area for further improvements, given the number of large investment projects, public-private partnerships (PPPs), and concessions in the pipeline.

"We are concerned and understand the difficult situation on floods in the center of the country during January and February; and commend the authorities' efforts to overcome it.

"We reaffirm the IMF commitment to continuing the excellent relationship with Mozambique and supporting the authorities' efforts to enhance growth and reduce poverty."