IMF forecasts 7 percent growth for Mozambique’s economy in 2015

13 May 2015

The International Monetary Fund (IMF) forecasts that the Mozambican economy will expand by 7 percent in 2015 and that annual inflation should stand at 5.5 percent, the organisation’s representative in Mozambique announced on Tuesday in Maputo.

The forecasts disclosed by Alex Segura-Ubiergo follow an IMF mission in the scope of the fourth evaluation of the Policy Support Programme set up with the Mozambican authorities in June 2013.

Regarding the forecasted growth rate for gross domestic product (GDP), the IMF representative warned that it could change due to “the lower price of raw materials” exported by the country and “the need for budget consolidation”, already indicated in the state budget for 2015.

Even though it may eventually be less, the forecasted growth will always be at “a very high level” compared to the average of 4.5 percent estimated for countries of the sub-Saharan Africa region, he stressed.

The state budget was only approved in April, due to elections being held in late 2104. The financial institution nevertheless does not anticipate any slippage in public accounts, because “budget implementation was prudent” in the first quarter.

The country’s budget deficit had worried the IMF “in the last two or three years”, given that it was above 10 percent of GDP, leading to “strong fiscal expansion.” It should drop back to sustainable levels in line with the targets set in the document, which calls for “implicit fiscal adjustment above 3 percent of GDP, which will help stabilise public debt in the middle term.”

The institution holds that Mozambique’s external debt, estimated at nearly US$6 billion and causing some concern among economic analysts, is currently moderate, as it is below the “barrier of 40 percent of GDP.”

But given the need to invest in infrastructures, the IMF recommends that the authorities should adopt a system to establish project priorities based on their economic impacts.

The IMF also praised the Mozambican government for the “progress registered in implementation of structural reforms” and because it was the first country in the region to request a Fiscal Transparency Evaluation, whose report has already been published. (Macauhub/MZ)