The Bank of Mozambique (BM) expects a recovery of lower economic activity this year.
According to the central bank, the reinforcement of restrictive measures due to the acceleration of the Covid-19 spread at the beginning of the year, especially in the areas of leisure and restaurants, combined with the negative effect of the military conflict in the northern area, conditioning the normal flow of part of the activities of natural gas exploration projects, are some of the elements that lead to a downward revision of the economic outlook for 2021.
In its Economic and Social Plan (PES) for this year, approved by Parliament, the government projected economic growth of 2.1 percent. However, without presenting the new forecasts, the WB mentions that the rate should be revised downwards, linking the negative effects already described to climate shocks.
Last Wednesday, the Monetary Policy Committee of the Bank of Mozambique (CPMO) met in Maputo to assess recent developments in the Mozambican economy.
At the end of the meeting, the World Bank issued a press release in which the financial institution argued that it was pertinent to deepen structural reforms in the economy, aimed at strengthening institutions, improving the business environment, attracting investment and creating jobs.
“The rapid spread of Covid-19 since the beginning of the year, the prolongation of military conflicts and the occurrence of natural disasters will continue to require a greater financial effort by the state, thus increasing concerns about the fiscal stance in 2021”, it points out.
Since the last CPMO, held at the end of last year, the internal public debt, excluding loan and lease contracts and outstanding liabilities, has increased from 182,325 million meticais to 183,819 million meticais, according to the bank.
“The foreign exchange market is under pressure in the demand for foreign currency. The Metical continues to depreciate, reflecting the high risks and uncertainties prevailing in the domestic economy and the strengthening of the US dollar in the international market. Meanwhile, the balance of gross international reserves increased to USD 4,086 million by 22 January, allowing more than six months of imports of goods and services to be covered,” the Bank of Mozambique said.
