On 6 May 2023 the IMF issued a press release following discussions with Mozambique in relation to the second review of the program under the extended credit facility (ECF) arrangement.

The report notes that Mozambique’s economic recovery has gained momentum and recovery is under way in the sectors most affected by the pandemic including hospitality, transport, and communications. Economic growth reached 4.1% in 2022 and is projected to rise to 5% in 2023. The return to growth is partly due to activity in the extractive industries, including the first LNG project which commenced production in October 2022.

The deficit was larger than expected in 2022 due to an overrun in the cost of implementing the wage bill reform, partly offset by lower spending on other goods and services.

Government revenue was around 1% of GDP lower in 2022 than the planned amount, as there was lower tax collection on goods and services, especially value added tax (VAT), than expected. The IMF is encouraging the government to continue with additional measures to reduce the annual wage bill to its budgeted level, to safeguard fiscal sustainability.

Steady progress has been achieved on structural reforms. The structural benchmarks related to budgetary planning and financial programming were achieved. The structural benchmark related to implementation of the proposed elimination of VAT exemptions and zero-ratings was not fully met, because the Code as submitted to parliament underwent some revisions in its passage through parliament and some items were excluded. There is still scope to eliminate VAT exemptions without affecting the most vulnerable groups.