On 3 August 2018 the IMF released a statement following a visit to Mozambique to look at recent macroeconomic developments; update the macroeconomic framework for 2018-19; and provide input to the preparation of the 2019 draft budget.
The economy of Mozambique is recovering gradually with real GDP growth reaching 3.75% in 2017 supported by a strong recovery in agriculture and higher mining production. The government has implemented important measures to contain the fiscal deficit including the elimination of subsidies on fuel and wheat; adoption of an automatic fuel price adjustment mechanism; and an increase in electricity and public transportation prices. GDP growth is projected to be between 3.75% and 4% in 2018, rising to a rate between 4% and 4.5% in 2019.
For the 2019 budget the IMF recommended prudent revenue and spending projections. On the revenue side VAT exemptions should be removed except for basic goods, and VAT administration should be strengthened.
The IMF welcomed ongoing efforts to clear domestic payments arrears to suppliers and adopt reforms to avoid any further accumulation of arrears. The importance of eliminating over time the VAT refund backlog was also stressed.
