According to the British magazine The Economist, the International Monetary Fund’s analysis of Mozambique shows that IMF financial assistance programmes in the country are unlikely before 2022, contrary to what the Mozambican government says.
“The difference of opinion between the government and the IMF on the state of the economy reinforces our view that an IMF programme in Mozambique is unlikely within the horizon of our forecasts from 2018 to 2022,” the experts from the British magazine The Economist’s economic analysis write.
In a commentary to the IMF’s findings under Article IV, which reviews the economies of its member countries annually, EIU analysts say “normalisation of relations is not in prospect”.
The IMF, the EIU says, has warned of macroeconomic imbalances and advocated more austerity to curb public spending, but the government “holds to the thesis that the economy has already ‘turned the page’ since the hidden debt scandal, with authorities projecting 5.3 percent growth in 2018, against forecasts of around 3 percent by the EIU and IMF”.
For the Economist analysts, the difference in forecasts is not, however, the most worrisome matter for potential investors in this African country.
“More worrisome is the potential impact of the financial crisis on the real economy, as the IMF warns that over-indebtedness is creating macro-financial vulnerabilities in the local banking system, and that delays in payments to suppliers could reach 20 percent of GDP in 2023 if they continue at the current pace,” the EIU paper reads.
The Fund, they argue, has already made it clear that the resumption of financial support “depends on the country restoring debt sustainability and tightening fiscal policy, but the government, as expected, has not made any real progress in any of these areas”.
“We think that the exclusion from international credit markets and a lack of liquidity in the domestic market will force the government to control borrowing, but debt levels will probably remain well above the Fund’s threshold for low-income countries dependent on raw materials,” the analysts conclude.