A staff team from the International Monetary Fund, led by Michel Lazare, visited Mozambique during October 14-28, 2015 to complete discussions towards the completion of the fifth review under the three-year Policy Support Instrument (PSI) approved in June 2013 (see Press Release No. 13/231) and under the 2015 Article IV Consultation, and reach understandings on a new program to be supported under the IMF’s Stand-by Credit Facility (SCF).
The team met with Prime Minister Carlos Agostinho do Rosario, Economy and Finance Minister Adriano Maleiane, Bank of Mozambique Governor Ernesto Gove, and other sectoral ministers, senior government officials, the private sector, civil society, and development partners.
At the conclusion of the visit, Mr. Lazare issued the following statement. The Mozambican authorities and the IMF team completed the Article IV Consultation discussions and reached a staff-level agreement for completing the fifth review under the PSI-supported program. In addition, they have reached a staff-level agreement on an 18-month economic framework through 2017 that could be supported with SDR 204.48 million (about US$286 million) under the IMF’s SCF, subject to approval by IMF management and the Executive Board. The Executive Board meeting is tentatively scheduled for mid-December 2015. “Economic activity in 2015 has remained solid, though new challenges have emerged and require decisive policy action.
In the mission’s views, growth will reach 6.3 percent in 2015 and is projected to accelerate slightly to 6.5 percent in 2016. Inflation is currently still low at about 2 percent, but is expected to increase towards 5-6 percent over the next few months due to the recent depreciation of the metical, and required adjustments in administered prices. Over the medium term (2017-20), growth could average 8 percent owing to positive prospects of massive investments in extractive industries, especially liquefied natural gas.
While medium-term prospects remain positive, short-term challenges have become more complex. As other countries in the region, Mozambique is currently experiencing an external shock associated with the drop in commodity prices, lower growth in trading partners, and delays in investment associated with large natural resource projects.
