Friday, July 3, 2015


The International Monetary Fund (IMF) has called for “stronger controls” over Mozambican state owned companies, but continues to regard the countries high growth rate and low inflation as “commendable”.On Thursday the IMF Executive Board completed the fourth review of Mozambique’s economic performance under the program supported by the Policy Support Instrument (PSI). The IMF describes the PSI as an instrument designed for countries that do not need balance of payments support.In other words, Mozambique is no longer asking for or receiving IMF loans. Nonetheless the IMF approval for Mozambique’s economic policies is still regarded as useful, since it sends positive signals to other donors and funding agencies.A brief Thursday IMF press release cites the Deputy Managing Director and Acting Chair, Min Zhu, as prising Mozambique’s growth and inflation record saying, while warning that low commodity prices increase the risks associated with the country’s coal and natural gas projects for the immediate performance.He described Mozambique’s performance under the PSI as “mixed”, claiming that “While structural reforms have been proceeding, there were macroeconomic policy slippages and reserve losses in late 2014”.Nonetheless the IMF was optimistic that “With a strong fiscal adjustment envisaged in the current budget and a recent tightening of liquidity conditions, needed steps to maintain macroeconomic stability are now in place. The decline in international reserves has largely been reversed, and greater exchange rate flexibility will help the economy to better respond to external shocks in the period ahead”.“The strong fiscal adjustment in the budget appropriately calls for revenue mobilization and expenditure restraint, while safeguarding social programs”, the release adds. “Recent fiscal reforms have strengthened the policy framework but more needs to be done to improve public financial management, including by stronger controls over state-owned enterprises and enhanced management of fiscal risk”.The IMF does not say which state-owned enterprises it has in mind, but it is reasonable to assume that the Mozambican Tuna Company (EMATUM) is among them, given the fact that this year it must start repaying the 850 million US dollar loan it obtained on the Eurobond market in 2013.The press release concludes that “Ongoing progress on a broad range of structural reforms, including the passage of the new mining and hydrocarbon legislation, is encouraging. Nonetheless, further measures are needed to make poverty more responsive to growth and strengthen the business climate.”

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