Country Report Mozambique January 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 MrGuebuza, 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 macroeconomic stability, donor support and continuing inflows of foreign direct investment.
• Inflation is expected to fall to an average of 9% in 2009 and 8.9% in 2010, in response to declining international food and energy prices and rising agricultural output.

Monthly review

• The main opposition party, Resistencia Nacional de Mocambique (Renamo), has announced that it will hold its fifth party congress in March 2009, although doubts remain whether it has the financial resources to do so.
• The notorious assassin Anibal dos Santos Junior (Anibalzinho?) has escaped from prison in Maputo for a third time, having served less than three years for the murder of a Mozambican journalist, Carlos Cardoso, in 2000.
• Three suspects have been arrested in the long-running investigation into the murder in August 2001 of a central bank employee, Antonio Siba-Siba, who had been investigating fraud at a former state bank, Banco Austral.
• Mozambican health authorities are on high alert over the possibility of Zimbabwes cholera epidemic spreading to the border areas of Mozambique, where nearly 300 cases have so far been reported.
• The government has completed a preliminary draft of the 2009 budget, which envisages increasing expenditure by 17.2%, to MT104.3bn (US$422.5m), increasing the deficit to MT58.1bn.
• Given the expected fall in tax revenue from the Mozal aluminium smelter and the freezing of donor grants in 2009-10, the government is likely to reduce its expenditure commitments in the final budget.
• South African petrochemical giant Sasol has announced positive drilling results in Blocks 16 and 19, located off the coast of Sofala province.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;37;15;49;10
NAICS Code: 52;336;23;22;212