Mozambique must cut cost of doing business

JOHANNESBURG – Mozambique’s economic outlook is healthy but it must still cut the cost of doing business, improve revenue collection and reduce red tape, the International Monetary Fund said on Thursday.

Real gross domestic product (GDP) in Mozambique, a star pupil of the Fund, grew a healthy seven and a half per cent in 2005 and the Fund and other experts expect strong growth this year thanks to prudent economic policies. But high oil prices and capricious weather could cast a cloud over the economic outlook, the Fund said in a statement after meetings between IMF Africa department director Abdoulaye Bio-Tchane and the southern African country’s economic management team in Maputo.”Fiscal and monetary policies remain prudent, and the macroeconomic outlook remains favourable.However, vigilance will be required in light of volatile oil prices and unpredictable weather,” the Fund said.The Fund has made cutting red tape and improving the business environment the theme of its latest statements on Mozambique, in what analysts say is a message that the country is moving far too slowly on those fronts.The Fund said to sustain economic growth and put a further dent in poverty, Mozambique needed to persevere with stringent economic reforms and address “governance issues” – which usually refers to fighting corruption and improving efficiency in management.It also again highlighted the need to cut the costs of doing business, which include lengthy processes for registering companies and tax laws that are more than a century old.The Fund said it sought more efficient budgeting, better disclosure of revenues from natural resources, enhanced revenue collection which implied a wider tax base and effective use of scaled-up donor cash.In June the Fund said it would release US$2,4 million to Mozambique as part of a US$16,7 million package under its Poverty Reduction and Growth Facility.The figure was relatively small but IMF approval of a nation’s economic management usually unlocks more aid from other lenders.Last month, the World Bank cancelled most of Mozambique’s external debt under a plan promoted by the Group of Eight (G8) wealthiest nations – bringing its debt forgiveness under the Highly Indebted Poor Countries initiative to US$2,36 billion.The Fund said it was concerned about the government’s plans to hand more decision-making to provinces, saying the process needed to be clarified and should include appropriate checks and balances to ensure resources were well spent.Bio-Tchane earlier told a news conference the IMF was strongly committed to helping African countries like Mozambique to achieve United Nations Millennium Development Goals – the centrepiece of which is halving poverty by 2015.Nampa-ReutersBut high oil prices and capricious weather could cast a cloud over the economic outlook, the Fund said in a statement after meetings between IMF Africa department director Abdoulaye Bio-Tchane and the southern African country’s economic management team in Maputo.”Fiscal and monetary policies remain prudent, and the macroeconomic outlook remains favourable.However, vigilance will be required in light of volatile oil prices and unpredictable weather,” the Fund said.The Fund has made cutting red tape and improving the business environment the theme of its latest statements on Mozambique, in what analysts say is a message that the country is moving far too slowly on those fronts.The Fund said to sustain economic growth and put a further dent in poverty, Mozambique needed to persevere with stringent economic reforms and address “governance issues” – which usually refers to fighting corruption and improving efficiency in management.It also again highlighted the need to cut the costs of doing business, which include lengthy processes for registering companies and tax laws that are more than a century old.The Fund said it sought more efficient budgeting, better disclosure of revenues from natural resources, enhanced revenue collection which implied a wider tax base and effective use of scaled-up donor cash.In June the Fund said it would release US$2,4 million to Mozambique as part of a US$16,7 million package under its Poverty Reduction and Growth Facility.The figure was relatively small but IMF approval of a nation’s economic management usually unlocks more aid from other lenders.Last month, the World Bank cancelled most of Mozambique’s external debt under a plan promoted by the Group of Eight (G8) wealthiest nations – bringing its debt forgiveness under the Highly Indebted Poor Countries initiative to US$2,36 billion.The Fund said it was concerned about the government’s plans to hand more decision-making to provinces, saying the process needed to be clarified and should include appropriate checks and balances to ensure resources were well spent.Bio-Tchane earlier told a news conference the IMF was strongly committed to helping African countries like Mozambique to achieve United Nations Millennium Development Goals – the centrepiece of which is halving poverty by 2015.Nampa-Reuters