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.
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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