Country Report Mozambique July 2009

Outlook for 2009-10

• Mozambique's ruling party, Frente de Libertacao de Mocambique (Frelimo), is expected to remain in power under the president, Armando Guebuza, as Mozambique prepares for three elections that will be held on October 28th.
• 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 the global downturn.
• 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 4.9% in 2009, in response to changes in international food and energy prices and rising agricultural output, before climbing to 7.4% in 2010.
• The current-account deficit is forecast to narrow from an estimated 10.9% of GDP in 2008 to 9.7% of GDP in 2009, mainly because of a narrowing of the services and income deficits. The deficit will stay at about this level in 2010.

Monthly review

• The Movimento Democratico de Mocambique (MDM) has selected its leader, Daviz Simango, as its presidential candidate following a party convention.
• Several high-ranking members of the main opposition party, Renamo, have defected to join the MDM, including Renamo's parliamentary spokesperson, Maria Moreno, and an MP, Ismail Mussa.
• An alleged assassination attempt has been made on Mr Simango at a rally in the northern city of Nacala, in which members of Renamo's "presidential guard" have been implicated.
• At least a dozen Renamo military personnel have been killed in an explosion at a camp in Sofala province, caused by poor storage of munitions.
• Mozambique's 19 main donors have confirmed funding pledges for 2010 totalling US$804.5m, which include US$471.8m of direct budget support and US$332.7m for common development funds.
• New data released by the Instituto Nacional de Estatistica (INE) indicate that the national HIV/AIDS prevalence rate has stabilised at around 14%.
• The government has announced plans to sell a 5% stake in M-Cel, a wholly state-owned mobile-phone provider, to Mozambican investors.

Source: Country Report