Mozambique faces challenge of growth and sustainability, IMF says

9 January 2015

The International Monetary Fund (IMF) believes that the combination of economic growth and fiscal and debt sustainability is the main short-term challenge for Mozambique, estimating that the economy will remain strong in 2015.

The performance of the Mozambican economy in 2014 and prospects for 2015 are reviewed in the Third Review of the Policy Support Instrument (PSI), completed on Monday by the IMF executive board in Washington.

“The main short-term challenge is to maintain the momentum of growth, while safeguarding fiscal and debt sustainability. Fiscal sustainability has to start in the 2015 state budget, to restore prudent fiscal management,” said the IMF in the Summary of Third PSI Review.

Recalling that the country enjoyed economic growth of 7.5 percent in 2014, the IMF Executive Board supports the continuation of key structural reforms, including Value Added Tax (VAT) and all tax administration, management of public finance and strengthening institutional capacity to ensure transparent management of public investment and debt.

The IMF says conclusion of negotiations of contracts for production of liquid natural gas is a “critical milestone” noting the project is one of the largest in sub-Saharan Africa.

Despite the significant risks arising from uncertain prospects in the global economy, the Third PSI review said, Mozambique will see robust growth, driven by the expansion of the natural resources sector and investments in infrastructure. (macauhub/MZ)