At the end of their stay, the mission issued a Press Statement. In the context of press statements from an IMF mission, this one is extremely frank. And, being frank, it is transparent and paints a serious situation for the Government. It is also unusual for a technical mission (since this mission announced from the outset that it was not here to negotiate) to have a meeting with a President. The fact that you have met both President Nyusi and the Prime Minister of Rosario implies that the Government is very concerned (which is good).
The mission presented the context of the economic situation, which it characterized as one of “difficult economic challenges”. The mission's new GDP projections are 4.5% (compared to 6.6% in 2015 and three percentage points below historical levels). At the same time, the mission indicated that there are substantial risks that could still contribute to lower GDP growth.1 The mission confirmed what was already known: that the fiscal situation was too expansionary, both during 2015 and during the first 5 months of 2016 (January to May)2, resulting in a rise in year-on-year inflation of 18.31TP1Q and a depreciation of the Metical of 281TP1Q in 2016, with international reserves in continuous decline. CIP interprets this as meaning that the Government's fiscal policy is beyond the control of the instruments available to both the Government and the Bank of Mozambique.
