Maputo, Mozambique — The Mozambican economy grew by only 2.1 percent in 2000, Finance Minister Luisa Diogo told reporters on Thursday.
The final figures for the year are thus considerably worse than the government's predictions.
Addressing parliament in December, Prime Minister Pascoal Mocumbi had forecast a 3.8 percent growth in gross domestic products (GDP) for 2000.
This figure had itself been scaled down from earlier hopes of a growth rate of six to eight percent.
Since the Mozambican population is growing at a rate of about 2.6 percent per annum, the disappointing figure for 2000 means that GDP per capita is actually declining.
Diogo said the main reason for the low growth rate was the catastrophic flooding that hit southern and central Mozambique in February 2000. The floods caused severe damage to agriculture, and to the road and rail networks.
The disruption caused to transport links was one of the major reasons for a sharp rise in the inflation rate. In 2000 the average 12 monthly inflation rate was 12.7 percent (though the end of year rate was 11.4 percent).
During the year the Mozambican currency, the metical, lost 20 percent of its value against the US dollar, which was "nothing to be enthusiastic about," remarked Diogo.
However, the central bank "worked hard to stabilise the monetary situation," she added. "Matters could have been much worse."
Diogo recognised that the metical is continuing to devalue, but argued that this was not due to any excess in the money supply, or any shortage of hard currency.
Instead, she blamed devaluation on the "dollarisation" of the economy. Diogo attacked businesses "who are using a foreign currency as the basis for their transactions, particularly in the service sector (as visitors to Maputo hotels can readily testify)."
"We want to see this behaviour changed," she said. "We should not be introducing instability into our own currency. The metical should be used for transactions."
But she said the government was not yet considering "administrative measures" to force companies to invoice exclusively in meticais.
Double digit inflation and single digit growth was exactly the opposite of what Mozambique needed, said the minister. This year the target is for 10 percent growth, and for an inflation rate of between six and seven percent.
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The inflation figures for the first quarter of 2001 are encouraging. Diogo said that prices had fallen in the first two months, before rising slightly in March.
Monthly inflation was -1 percent in January, -1.2 percent in February and 0.7 percent in March, which means that, taken as a whole, the inflation rate for the quarter was negative (-1.5 percent).
Diogo described the budget for 2001 as "expansionary." Forecast public expenditure is 19,900 billion meticais (about 1.05 billion US dollars).
Only 8,400 billion meticais is expected from the Mozambican state's own revenue (mainly taxes). Some 8,000 billion meticais is expected from foreign grants, and 2,000 billion meticais from foreign credits. The rest will come from the issuing of domestic public debt in the form of treasury bonds.
Diogo pledged that the government would take great care with domestic debt. Unlike foreign debt which typically matures over 50 years, and has a grace period of five or 10 years, domestic debt matures in at most 10 years, and there are no more than a few months of grace.
