Country Report Mozambique June 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 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 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 4.6% in 2009 before rising to 7.5% in 2010, in response to changes in international food and energy prices and rising agricultural output.
• The current-account deficit is forecast to narrow from an estimated 10.9% of GDP in 2008 to 9.8% of GDP in 2009 and 9.6% in 2010, mostly owing to the narrowing of the services and income deficits.

Monthly review

• Mozambique's Commissao Nacional das Eleicoes has announced the timetable for the presidential, legislative, and provincial elections.
• The IMF has urged the government to implement a fiscal stimulus plan in order to alleviate the impact of the global downturn.
• The Fund has warned that the fiscal stimulus should not jeopardise medium-term economic stability, which will be critical for Mozambique to resume strong economic growth and make progress in poverty reduction.
• Mozambique's 19 Programme Aid Partners have completed their annual joint review, reporting satisfactory performance by the government and some progress with anti-corruption measures.
• Inflation continued to trend downward during the first quarter of 2009, driven by the impact of lower international prices for fuel and food.
• The government has secured financing for the Mepanda Uncua hydroelectric dam on the Zambezi River in Tete province, with a US$2.3bn loan from Eximbank of China.
• Foreign direct investment in Mozambique's mining sector has increased dramatically, rising from US$101m in 2004 to US$804m in 2008.

Source: Country Report

This report covers the following industry codes:
SIC Code: 49;10
NAICS Code: 22;212