Country Report Mozambique February 2009

Outlook for 2009-10

• 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 Mr Guebuza, progress on reform could slow, given opposition to some of the proposed changes within the cabinet and from Frelimo hardliners.
• 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 4.8% in 2009 and 5.2% in 2010, supported by strong agricultural growth, donor support and continuing inflows of foreign direct investment.
• Inflation is expected to fall to an average of 8.3% in 2009 and 8.8% in 2010, in response to declining international food and energy prices and rising agricultural output.

Monthly review

• The Constitutional Court has ratified the results of the municipal elections held in November 2008, confirming Frelimo's crushing victory.
• The main opposition party, Resistencia Nacional de Mocambique (Renamo), has rejected the results and refused to co-operate with the new municipal authorities, although the party will contest the run-off election in Nampula.
• The former transport minister, Antonio Mungwambe, has been arrested on suspicion of embezzlement as part of an investigation into the national airports company, Aeroportos de Mocambique (ADM).
• The National Assembly has approved the 2009 budget, which envisions total expenditure of MT98.1bn (US$3.9bn) and total revenue of MT46.2bn, producing a deficit of MT51.9bn, most of which will be financed by donors.
• The government has introduced a new tax code for small businesses as part of plans to bring the large informal sector into the tax net.
• The government has forecast real GDP growth of 6.7% in 2009, driven by agriculture and construction.
• According to the National Statistics Institute (INE), year-on-year inflation fell to 6.2% in December, its lowest level since April 2007.
• Food shortages are set worsen in Mozambique as a result of late rains, flooding and low food stocks, necessitating emergency food aid for an estimated 450,000 Mozambicans in 2009.

Source: Country Report

This report covers the following industry codes:
SIC Code: 1
NAICS Code: 11