Country Report Mozambique May 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 6.8% in 2009 before rising to 7.2% 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 13.3% of GDP in 2008 to 8.4% of GDP in 2009, owing to the narrowing of the services and income deficits, before rising to 10.2% of GDP in 2010.

Monthly review

• The National Assembly has approved legislation authorising the presidential, legislative and provincial elections to be held on the same ballot.
• Mr Guebuza has announced that all three elections will take place on October 28th 2009.
• The IMF has published its review of the government's national poverty reduction strategyknown by its Portuguese acronym, PARPA IInoting progress with improving social indicators and public financial management.
• However, the Fund criticised poor progress with anti-corruption strategies, and called for improvements to the business operating environment.
• The metical's depreciation against the US dollar has started to accelerate.
• The adverse global climate has prompted the government to postpone an international tender for a third mobile-phone operator in Mozambique.
• The government has started talks with a South African airline, Sun Air, to operate domestic air services.
• Mozambique's tourism sector continued to expand rapidly in 2008, despite the impact of the global downturn in the last quarter of the year.

This report covers the following industry codes:
SIC Code: 49;60;39;37;70
NAICS Code: 22;52;31;336;72