The International Monetary Fund (IMF) has highlighted two fundamental strategies for strengthening Mozambique’s economic stability, despite its high levels of debt. According to IMF mission chief Pablo Lopez Murph, Mozambique can mitigate vulnerability by prioritising two key factors: promoting greater economic growth and maintaining prudent fiscal policies.
Cited by Further Africa, Lopez Murphy, who is in Mozambique for meetings with the country’s leaders, emphasised the need to reduce the vulnerability associated with high levels of debt, calling for sustained economic growth, as well as responsible fiscal management to support the development of the private sector.
With regard to the Economic Acceleration Package (PAE) – an initiative launched in August 2022, initially received with scepticism, Lopez Murphy noted positive progress in reducing spending, instilling confidence in its sustainability if aligned with government earnings and other sources of revenue.
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“The SAP raised some concerns for us. Initially, we had doubts as to whether the measures adopted in 2022 would be sustainable. However, in 2023, we believe that the measures are heading in the right direction, as we have seen reductions in various expenses, including tax expenditure. We are confident that the measures will be sustainable if they continue to match government earnings and other sources of revenue,” he added.
The IMF also recommended reducing tax rates in order to incentivise economic activity, balancing the search for revenue by promoting economic growth.
Overall, the IMF believes that Mozambique should follow a set of measures that will allow it to balance economic growth and, at the same time, manage debt, which could lead the country to a more stable economic future.
