International Monetary Fund (Washington, DC)

16 March 2012

Mozambique: Statement By IMF Staff Mission to Nation

press release

Washington, DC — An International Monetary Fund (IMF) mission visited Mozambique during March 5-16, 2012 to conduct the fourth review under a three-year Policy Support Instrument (PSI) which was approved in June 2010. Policy discussions were held with the Minister of Finance, Hon. Manuel Chang; the Minister of Planning and Development, Hon. Aiuba Cuereneia; the Governor of the Bank of Mozambique, Hon. Ernesto Gouveia Gove, several line ministers, and other senior government officials. The mission met with representatives of the private sector, development partners, and civil society, including labor unions. The mission also visited Maputo's railway station and workshops managed by Mozambique's state-owned rail and port operator, Caminhos de Ferro de Mozambique (CFM) to learn from CFM's senior representatives about their investment plans to upgrade Mozambique's port and railway infrastructure.

Mr. Johannes Mueller, Mission Chief for Mozambique, issued the following statement in Maputo at the conclusion of the mission:

"Mozambique's economy sustained a strong performance in 2011 despite a marked deterioration in the global economic environment. Economic activity is estimated to have grown by 7.4 percent, driven to a large extent by good harvests and a booming mining sector. Real GDP growth in 2012 is expected to remain close to last year's, although subject to downside risks due to the current global environment. Headline inflation decelerated sharply from its peak of 16.6 percent at end-2010 to 2.5 percent in February 2012, greatly benefiting the poor, and should remain well in single-digit levels this year. This remarkable disinflation reflects the determination of the authorities in tightening monetary and fiscal policies, favorable developments of international prices, a good harvest, and a stronger metical. Exports and foreign direct investment have remained strong, setting the stage for a surplus in Mozambique's balance of payments and a further strengthening of international reserves in 2012.

"The mission welcomes the authorities' renewed commitment to pursuing prudent macroeconomic policies under their economic program supported by the IMF. The authorities' policies are geared toward preserving macroeconomic stability and sustaining high and inclusive economic growth. The mission agrees with the authorities' policy intentions for 2012 to cushion the possible impact of a temporary global slowdown through the adoption of more accommodating policies, while safeguarding the recent disinflation gains. The mission also welcomes the authorities' commitment to accelerating poverty reduction and the initial steps in implementing the 2011-14 Poverty Reduction Strategy (PARP). Looking ahead, it urged the authorities to further deepen their efforts to enhance agricultural production and productivity, create jobs, and foster human and social development, including through the further expansion and determined implementation of the strengthened social protection systems.

"The mission concurs with authorities' structural reform priorities. It welcomes their sustained commitment to further strengthening financial sector development, public finance management, tax policy and administration, debt management and investment project selection, natural resource management, and the framework to fight corruption and money laundering.

"The mission expects to conclude these discussions over the coming weeks. The IMF's Executive Board is scheduled to consider the fourth review of the PSI in June 2012."

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