- Mozambique government acknowledged that not all of the objectives outlined in the 2022 Economy and Social Plan and State Budget (PESOE-2022) had been accomplished
- According to data from the National Statistics Institute (INE), Mozambique’s economy expanded by 4.12 percent in contrast to the 2.9 percent predicted at the start of the 2022 fiscal year
- The Government plans to use $250 million Mutual Guarantee Fund from the world bank to support small and medium-sized businesses in Mozambique once the fund gets approved.
The government of Mozambique has acknowledged that not all of the objectives outlined in the 2022 Economy and Social Plan and State Budget (PESOE-2022) have been accomplished but it remains positive that the gains will rollover to this year.
The government set 575 targets in 2022, but only achieved 433 of them, or 75% of the target, according to Executive Spokeswoman Ludovina Bernardo. The remaining 142 targets, or 25%, were not carried out.
According to Bernardo, state spending in 2022 totalled 422.5 billion meticais, or 88.8 percent of the plan, while receipts totalled 283 billion meticais, or 96.3 percent of the annual plan.
The representative was eager to emphasize that there was internal macroeconomic stability despite negative conditions.
Based on the results of the Gross Domestic Product, “the national economy continues to demonstrate indications of recovery” (GDP). According to data from the National Statistics Institute (INE), Mozambique’s economy expanded by 4.12 percent in contrast to the 2.9 percent predicted at the start of the 2022 fiscal year, Ludovina Bernardo said.
World Bank’s projection
As demand increases and the economy gains from the commencement of liquefied natural gas production in 2022, Mozambique’s economic growth is anticipated to go up in the medium term, averaging 5.7% between 2022 and 2024, as per the World Bank .
The World Bank noted that the start of LNG production at the offshore Coral project and the restart of other LNG projects would support the growth of the southeast African country.
Natural gas from Area 4 reserves in the Rovuma Basin, off the coast of Mozambique, is processed as part of the Coral LNG project, which is run by the Italian company Eni (ENI.MI). The firm started pumping gas mid 2022.
According to the World Bank, Mozambique’s agreement to a three-year extended loan facility with the International Monetary Fund and budget support from other partners will help to enhance its economic recovery.
The US$456 million programme, which was Mozambique’s first since the lender discontinued financing six years ago, was authorised by the IMF executive board in May 2022.
The World Bank cautioned that there were still risks for Mozambique’s economic development, particularly from growing import costs brought on by the situation in Ukraine, a potential increase in COVID infection waves, and insurgency in the country’s north.
Mutual Guarantee Fund’s Development
In order to prepare for the technical negotiations for the Mutual Guarantee Fund’s establishment, the National Treasury Director, Adriano Ubisse, met on Wednesday, February 8 2023 with officials of the World Bank, the Debt Directorate, and the Economic Acceleration Package (EAP).
The World Bank provided an update on the status of the project, along with “a proposed plan for the resource allocation under two major components with the goal of increasing direct exposure to and use of financial products and economic opportunities available for Micro Small and Medium Enterprises (MSMEs)” during the meeting.
The Government argues that the Mutual Guarantee Fund, which will initially have a value of $250 million, aims to address one of the major challenges to the growth of small and medium-sized businesses in Mozambique, namely, access to funding.
Additionally, thanks to this fund, the national bank will be able to support micro, small, and medium-sized businesses operating in the tourism, agriculture, commerce, and agricultural processing sectors with financial resources at more palatable interest rates.
The Economic Acceleration Package, announced by the President of the Republic, Filipe Nyusi, in August of last year, is a collection of 20 reforms that have been given the green light by the Mozambican Executive and are intended to restart economic growth with the possibility of short- and medium-term results.
The SAP team convened in January of this year to evaluate the initiatives carried out in 2022 and to keep track of the coordination of the initiatives slated for deployment.
A decision was made to encourage more interaction with the many sectors involved in the execution procedures of the different measures as part of the plan that was addressed.
