IMF国际货币组织全球-Republic-of-Mozambique_2019-Article-IV-Consultation_66页_2mb

Summary of IMF Country Report No. 19/166: Republic of Mozambique

Core Content

The IMF conducted the 2019 Article IV consultation with the Republic of Mozambique, which concluded on June 3, 2019. The report outlines the economic situation, policy discussions, and recommendations in the wake of Tropical Cyclones Idai and Kenneth, which severely impacted the country in March and April 2019. The IMF Executive Board approved $118 million in emergency assistance under the Rapid Credit Facility (RCF) to support recovery efforts.

Main Economic Developments and Outlook

• Economic Growth: Prior to the cyclones, economic growth was recovering and becoming broader-based, with real GDP growth at 3.7% in 2017 and 3.3% in 2018. However, the impact of the cyclones caused a sharp deceleration in 2019, with growth expected to rebound to pre-cyclone levels in 2020 and reach 4% annually in 2021-2022.
• Inflation: Inflation had been declining to low single digits before the cyclones, but the supply shock led to an acceleration, reaching 8.5% by April 2019.
• Fiscal Deficit: The primary fiscal deficit after grants was projected to reach 2.5% of GDP in 2019 due to lower tax collections and increased emergency spending, while the overall fiscal deficit remained high at 6.5% of GDP.
• Public Debt: Public debt was in distress but remained sustainable. It reached 110.5% of GDP at the end of 2018, with arrears on external debt totaling around $1.2 billion. The authorities are working to restructure debt and bring it to moderate risk levels.
• Current Account Deficit: The non-megaproject current account deficit widened to 27% of GDP in 2019 due to the cyclones, but is expected to narrow to 12.5% of GDP over the medium term.

Key Policy Recommendations

• Fiscal Space: Increase fiscal space in the short term by reallocating lower-priority spending to emergency assistance and reconstruction. Ensure that grants and highly concessional loans are used to finance the budget.
• Fiscal Consolidation: Implement gradual fiscal consolidation over the medium term to reduce public debt-to-GDP ratios and create fiscal buffers for future natural disasters.
• Monetary Policy: Continue the cautious normalization of monetary policy, including reducing the policy rate, while maintaining exchange rate flexibility and international reserves.
• Financial Sector Resilience: Strengthen the financial sector by enhancing bank resolution frameworks, modernizing the banking system and central bank laws, and improving supervisory capacities.
• Governance and Transparency: Improve governance, transparency, and accountability, including the fight against corruption. Publish a diagnostic report on governance and corruption challenges.
• Climate Resilience: Integrate climate change resilience into the broader development agenda and enhance preparedness for adverse weather events.

Key Challenges and Risks

• Natural Disasters: Mozambique is highly vulnerable to natural disasters and climate change. The impact of TC Idai and Kenneth caused significant damage to infrastructure, agriculture, and public services.
• Debt Restructuring: The country is engaged in debt restructuring with private creditors and has taken legal actions against those involved in previously undisclosed loans.
• Implementation Capacity: Weak implementation capacity and limited access to external financing pose risks to fiscal consolidation and reconstruction efforts.
• Security and Political Stability: Ongoing violence in the North and potential backtracking in peace negotiations could hinder economic recovery.
• Monetary and Financial Risks: The cyclones may increase non-performing loans (NPLs) due to lost income and assets in affected areas.

Key Institutional and Legal Developments

• The authorities have taken legal actions against individuals involved in the undisclosed loans, including former officials and Credit Suisse executives.
• An agreement in principle with Eurobond holders was reached to provide debt service relief and extend principal repayments.
• The government has reserved its legal rights regarding the Eurobond and MAM loan while investigations continue.
• The December 2017 decree has established new procedures for government debt issuance and guarantees, which must be strictly followed.

Conclusion

The IMF Executive Board commended the authorities for their reform efforts and commitment to macroeconomic stability, inclusive growth, and addressing governance challenges. They emphasized the need for continued progress in fiscal consolidation, debt management, and resilience-building against climate shocks. The report also highlights the importance of international support and the need to maintain a stable monetary and financial environment.