Country Report Mozambique December 2008

Summary

Frelimo is expected to remain in power under the president, Armando Guebuza, as Mozambique enters a lengthy pre-election period, which will culminate in legislative and presidential elections in December 2009.
Although no changes to the donor-led economic programme are expected under MrGuebuza, progress on reform could slow, given opposition within the cabinet and from Frelimo's hardliners to some of the proposed changes.
Foreign investment in the mining sector is expected to continue as foreign companies step up their exploration activities, but the pace of investment will be slower than in previous years owing to financing restraints.
Despite the global economic downturn, real GDP growth is forecast to remain strong at 5.2% in 2009 and 6.3% in 2010, supported by macroeconomic stability, donor support and continuing inflows of foreign direct investment.
Inflation is expected to fall to an average of 9.7% in 2009 and 8.9% in 2010, in response to falling international food and energy prices and rising agricultural output.

The municipal elections held on November 19th have, as had been expected, produced a resounding victory for Frelimo, which won outright control of 41 out of 43 municipalities, including three of the five councils held by Renamo.
The result was too close to call in Nampula, where the incumbent Renamo mayor, Manuel dos Santos, will face a run-off against Frelimo's Chale Ossufo.
The Renamo leader, Afonso Dhlakama, has denounced the election as fraudulent, alleging numerous irregularities, although he has provided no evidence to substantiate his claims.
The IMF has completed its third review of the government's policy support instrument, noting significant progress with improving fiscal and public financial management.
The government has pledged to end in the 2009 budget the fuel price subsidies and suspension of import duties introduced earlier this year.
According to data from the Banco de Mocambique (BDM, the central bank), real GDP growth slowed during the first half of 2008 to 6.7%, down from 8.8% in the same period in 2007, owing to lower agricultural and industrial output.
The global downturn and credit crisis could put in jeopardy the development of several mega-projects, including the Mepanda Uncua hydroelectric dam, the Corridor Sands titanium project and two steelworks in Maputo.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60
NAICS Code: 52