Speaking at a press conference today in Maputo, the Minister of Economy and Finance Max Tonela acknowledged the IMF’s support and commitment invested in Mozambique.
The event marked the conclusion of the fund’s first IMF since the approval of a US$470M agreement under the extended credit facility signed last May.
As a result of the two-week work visit, Mr. Tonela said that an assessment was made about the country’s macroeconomic and fiscal performance in the last 6 months and the prospects for the evolution of the real, fiscal, monetary, and external sectors, and for the continuation of the implementation of structural reforms.
As per the press conference, an update was made on the country’s growth rate forecast for 2022, from 2.9% to 3.8%; projection 2023 (5%), medium term (8%); (driven by agriculture, the mineral-energy sector, and the services sector) and on the average annual inflation, from 7% to 11% in 2022; (August reached 12%) due to exogenous factors – external inflationary pressures (eg Russia-Ukraine War, with impact on fuel and food prices);
As for the tax sector, to broaden the country’s fiscal base – the VAT and ICE reforms and the elimination of tax exemptions in customs Tariffs were aligned with the program. Mr. Tonela also commented o the rationalization of public expenditure, including the issue of salary Reform (TSU) to control the salary mass (14% of GDP in 2021), which should decrease to 11% in the medium term.
Another issue discussed was the preparation and publication of a medium-term debt strategy that should reverse the rising trend in the debt/GDP ratio (106.7% at the end of 2021) and reduce the risks of external public debt; restructured the domestic public debt and; give preference for concessional credits.
There were also mentions of the discussions on updating the National Strategy for Basic Social Security, 2016-2024, which will include new social security programs for the most vulnerable.
Other aspects discussed in depth were the latest developments in the area of natural gas, including (i) the prospects of resuming the activities of the LNG project in Area 1 led by Total Energies and the positive developments of ENI projects; (ii) the updated financial situation of public companies, their commitments and associated risks; and (iii) finally the resource management strategies in the sovereign wealth fund, which are already in the final stage of development by the Government.
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According to the minister, Mozambique has complied with all the commitments made to the Fund last June and is well on the way to reversing its growth trajectory despite several factors such as the conflict between Russia and Ukraine, the rise in cereal prices, and fuels. The approval of the Money Laundering Law and the launch of the Economic Acceleration Measures Package – PAE, among other discussed actions, were positively addressed by the Fund.