Wednesday, December 7, 2016


Signs of recovery in the Mozambican economy allow some optimism for the coming year, according to Prime Minister Carlos Agostinho do Rosario.Speaking on Wednesday in the Mozambican parliament, the Assembly of the Republic, where he introduced the government’s Economic and Social Plan for 2017, Rosario gave, as an example of recent stabilization, an improvement in the exchange rate of the Mozambican currency, the metical.In October the metical had fallen to around 80 to the US dollar, but by this week it had recovered to 73 meticais to the dollar. At the same time the draining of Mozambique’s net international reserves seems to have halted. Between October and the first week of December, the reserves increased by 60 million dollars, said Rosario, due mainly to the sale of foreign exchange by the commercial banks to the Bank of Mozambique.
Rosario admitted that there had been a sharp slowdown in the economy earlier in the year, which he blamed on a combination of drought, the armed attacks by the Renamo rebels on some of the country’s main roads, the fall in international commodity prices, reduced flows of foreign direct investment, and the suspension of direct budget support by some of Mozambique’s main foreign partners.
Donors and funding agencies cut their support to Mozambique in the wake of the scandal of well over a billion dollars of loans to the security-related companies Proindicus and MAM (Mozambique Assets Management) that were illicitly guaranteed by the previous government, headed by President Armando Guebuza. Those loans and guarantees were not disclosed, either to the Mozambican public, or to the International Monetary Fund (IMF) and other foreign partners, and have made the country’s foreign debt unsustainable.
Resultado de imagem para Carlos Agostinho do Rosario
Rosario said that annual economic growth in 2016, far from reaching the target of seven per cent, was only four per cent in the first three quarters of the year. The cost of living soared as the average 12 monthly inflation rate reached 15 per cent in September. (According to the Bank of Mozambique, the accumulated inflation rate from January to December is likely to reach 30 per cent).Rosario said the government had acted by revising the 2016 budget to adjust public expenditure to the real capacity to raise revenue, and had restructured the state business sector “to minimize fiscal risk and promote economic and financial efficiency.Important steps had been taken in exploiting the country’s natural resources, he added, including the plans for a floating liquefied natural gas plant operated by a consortium headed by the Italian energy company ENI, above the Coral South gas field, in the Rovuma basin off the coast of the northern province of Cabo Delgado. In the south, investment plans had been approved for expanded exploitation of natural gas and light oil in the Pande and Temane region of Inhambane province.

Such projects opened good prospects for the coming year, said Rosario, “which will be expressed in the creation of more jobs and business opportunities”.To restore international confidence in Mozambique, he added, the government was committed to an independent international audit of Proindicus, MAM and the Mozambique Tuna Company (Ematum). Between them the loans to these three companies added 20 per cent to Mozambique’s foreign debt.At the same time, Rosario said, the Assembly itself is holding its own inquiry into the public debt, and negotiations with creditors are under way to restructure the debt, in order to make it sustainable.These steps, the Prime Minister said, were regarded positively by the IMF, which had decided to start talks with the Mozambican authorities for a new programme of financial assistance. An IMF mission arrived in Maputo a week ago to begin these negotiations.The government, Rosario said, believed that a new programme with the IMF, “together with the fiscal and monetary adjustment measures under way, will contribute to the consolidation of macro-economic stability and the relaunching of sustainable economic growth in the medium term”.

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