Mozambique expected to post budget deficit of 9.5 pct in 2014, IMF says

17 March 2014

Mozambique’s budget deficit is expected to increase to 9.5 percent this year after totalling 3 percent in 2013, according to a report issued Sunday by the International Monetary Fund (IMF).

In the document the IMF said that Mozambique’s economy this year was expected to grow by 8 percent, following growth of 7 percent in 2013, but warned that the budget deficit was “unsustainable”.

The growth projection is in line with the projection from the Bank of Mozambique, but the IMF said that the country would have to spend more money this year in order to ensure presidential elections go ahead on 15 October of this year as planned.

Last Friday, Doris Rossi, the head of the IMF team that recently visited Mozambique for meetings with the government ahead of the second evaluation of the Policy Support Instrument (PSI), said that the strong performance of the country’s economy was also a reflection of mining, construction, transport and communications and financial services activities.

“The risks that appear in this scenario remain moderate and are mainly related to the international price of raw materials and uncertainties in terms of policies in an election year, Average inflation was 4.2 percent in 2013 and it is likely that this year it will be within the government’s mid-term range of 5-6 percent,” she said.

Rossi, who was speaking in Maputo, also said that inflation seemed to be well controlled, “but there are risks associated to inflationary pressures in neighbouring countries, especially South Africa, and an expanding budget.” (macauhub)