The IMF team led by Mr. Pablo Lopez Murphy recently concluded discussions with Mozambican authorities regarding the Fifth and Sixth Reviews of the ECF arrangement. Economic analysis indicated a significant contraction in Q4 2024; however, projections for 2025 suggest recovery. Fiscal consolidation is essential to ensure stability, amidst ongoing inflation control and cooperation with various stakeholders.
From February 19 to March 4, 2025, an IMF team, led by Mr. Pablo Lopez Murphy, engaged with Mozambican authorities regarding the policies necessary for the Fifth and Sixth Reviews under the Extended Credit Facility (ECF). The discussions proved fruitful, and further conversations will occur virtually in the following weeks.
Mr. Lopez Murphy stated that constructive discussions centered on fiscal, financial, and structural policies are essential for completing the ECF reviews. Mozambique experienced a significant economic downturn in late 2024, with real GDP contracting by 4.9 percent in Q4, leading to an overall growth rate of 1.9 percent for the entire year.
Looking ahead, economic growth in 2025 is anticipated to reach 3.0 percent, as social conditions stabilize and activity, particularly in the services sector, rebounds. However, preliminary figures indicate that 2024 saw substantial fiscal slippages, necessitating consolidation efforts in 2025 to ensure debt sustainability and macroeconomic stability.
Ongoing challenges include overstretched wage bill expenditures which limit crucial investments in social transfers and infrastructure. Fiscal strategies must prioritize social spending, reduce tax exemptions, and enhance debt management to avoid arrears. Despite inflationary pressures, inflation rates have remained under control, with the central bank recently easing monetary policy.
The IMF team interacted with President Daniel Chapo, Prime Minister Maria Levy, Minister of Finance Carla Loveira, and other key figures, as well as representatives from civil society and the private sector. The team expressed gratitude for the cooperation and constructive dialogue facilitated during the mission, with plans for continued discussions on program reviews in the near future.
In conclusion, the IMF’s engagement with Mozambique highlights pressing economic challenges and the path to recovery. Constructive dialogue with government officials points towards necessary fiscal measures to achieve sustainability. The anticipated growth in 2025 and controlled inflation are positive signs, but careful management of resources and social spending remains crucial for long-term stability.
Original Source: www.miragenews.com
