Mozambique Economic Update, December 2016 : Facing Hard Choices
This Mozambique economic update brief for 2016 includes a section on recent economic developments and a discussion of Mozambique’s economic outlook, followed by focus section(s) analyzing issues of particular importance.This has been a testing year...
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| Format: | Report |
| Language: | English en_US |
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World Bank, Washington, DC
2016
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| Online Access: | http://documents.worldbank.org/curated/en/334311481183208191/Mozambique-economic-update-facing-hard-choices http://hdl.handle.net/10986/25744 |
| Summary: | This Mozambique economic update brief
for 2016 includes a section on recent economic developments
and a discussion of Mozambique’s economic outlook, followed
by focus section(s) analyzing issues of particular
importance.This has been a testing year for Mozambique. An
ongoing downturn, brought about by low commodity prices,
drought and conflict, was compounded by the fallout from the
discovery of hidden debts in April 2016. The level of debt
took an explosive path with the addition of the previously
undisclosed loans, making Mozambique one of the countries in
Africa with the highest debt to GDP ratios. The rate at
which the Mozambican currency depreciated outpaced that of
most other African commodity exporters, including Nigeria
and Angola, where economic pressures have also been acute.
Foreign direct investment (FDI), and exports, are projected
to fall by 17 and 8 percent respectively in 2016. Clearly,
Mozambique’s macroeconomic stability has been shaken-up. The
agenda for restoring economic stability and confidence will
stretch into 2017 and possibly beyond. Key items on the
agenda include setting a medium term framework for restoring
fiscal sustainability, anchored in a target for reducing
debt and a credible fiscal adjustment program. Enhanced
financial sector surveillance and the strengthening of
crisis management instruments is also a priority,
particularly if further monetary tightening is in the
pipeline in the near term. Moreover, the current economic
circumstances highlight the need to manage fiscal risks and
contingent liabilities better. In this regard, reforms to
develop effective oversight over state-owned enterprises and
other public entities are urgent, along with reforms to
overhaul the framework for managing guarantees. |
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