An IMF team, led by Mr. Pablo Lopez Murphy, visited Mozambique to discuss policies for the Fifth and Sixth Reviews of the Extended Credit Facility arrangement. Economic growth faced decline due to social unrest, but recovery is projected for 2025. The mission highlighted the need for fiscal consolidation and prioritized social spending to ensure macroeconomic stability.
The International Monetary Fund (IMF) team, led by Mr. Pablo Lopez Murphy, visited Mozambique from February 19 to March 4, 2025, to engage with local authorities on the policies related to the Fifth and Sixth Reviews of the Extended Credit Facility (ECF) arrangement. The discussions were productive, with plans for continuation through virtual meetings in the forthcoming weeks.
In his concluding statement, Mr. Lopez Murphy emphasized the constructive nature of the engagement, focusing on the fiscal, financial, and structural policies essential for the ECF arrangement’s completion. The team noted a sharp economic contraction in the last quarter of 2024 due to social unrest, with a significant decline in real GDP. However, a recovery is anticipated in 2025, with projections suggesting a growth rate of 3.0 percent as conditions stabilize.
Preliminary estimates revealed significant fiscal challenges in 2024, attributed to the economic slowdown. To ensure sustainability and macroeconomic stability, fiscal consolidation is crucial for 2025. The IMF highlighted the need to rationalize excessive wage bill spending and prioritize social spending while enhancing debt management practices to prevent arrears.
Inflation levels have increased but remain within controllable ranges. The Bank of Mozambique has initiated a loosening cycle to mitigate inflation, recently cutting the policy rate. Despite the challenges posed by supply-chain disruptions and rising food prices, inflation has stayed below the implicit target of 5 percent.
During the mission, the IMF team engaged with several key figures, including President Daniel Chapo and Prime Minister Maria Levy. Additionally, discussions included representatives from civil society, political groups, and the private sector. The IMF team expressed gratitude for the cooperation and openness shown by the Mozambican authorities during their discussions, acknowledging the constructive dialogue that occurred.
The discussions between the IMF team and Mozambican authorities emphasized the need for prudent fiscal policies to address economic challenges. While the economic outlook remains cautiously optimistic for 2025, prioritizing fiscal consolidation, social spending, and effective debt management is critical for sustainable growth. The continued engagement underscores the importance of collaboration between the IMF and Mozambique in navigating current fiscal difficulties.
Original Source: www.miragenews.com
