Mozambique\'s economy in good shape

The representative of the International Monetary Fund (IMF) in Mozambique, Victor Vledo, said here Friday the Mozambican economy is in good shape. Speaking at a news conference in the capital, Maputo, Vledo strongly supported the Maputo administration\'s economic policy it has been following. The press conference marked the end of a two-week visit to Mozambique by an IMF mission to Mozambique to review programs being carried out by the government of Armando Guebuza. The mission was conducting the fifth review of the Mozambican economy under a three-year Policy Support Instrument (PSI) that was approved in June 2010. According to Vledo, fiscal revenues were very important for the implementation of the government\'s social and economic projects. Vledo said \"the economy remains buoyant, despite a weak global economic environment.\" He said the IMF believes Mozambique\'s economic growth rate this year will reach 7.5 percent, rising to 8. 4 percent in 2013. Over a five-year period he expected growth rates to remain high, at between 7 and 8.5 percent. He praised the government for keeping inflation under control. Mozambique now has the lowest inflation rate in the southern African region, reflecting the effects of determined monetary tightening in 2011, lower than expected prices of imported food, and stable administered prices. For much of 2012, inflation, as measured by the consumer price index, has been negative. Total inflation from January to September was just 1.2 percent. Vledo expected inflation to gather pace in the last couple of months of 2012, but not to exceed 2.5 percent for the year as a whole. But the IMF is predicting that inflation will rise to 6 percent in 2013. The IMF commends the authorities sustained commitment to prudent economic policies under the program supported by the IMF, he said. \"The authorities\' policies continue to aim at preserving economic stability and sustaining high economic growth and making it more inclusive.\" The IMF welcomed the Mozambican government\'s intention to maintain high public investment over the next few years to address the huge infrastructure gap, and its intention to facilitate credit expansion to the private sector and reduce the cost of doing business. The IMF mission also encouraged the Mozambican government in its efforts to enhance agricultural production and productivity, foster broad based employment creation, and support human and social development including through the further expansion and determined implementation of the basic social protection system. The IMF representative to Mozambique said the government now has room to allocate a sum of between 0.4 and 0.8 percent of GDP to social protection programs. He pointed out that the mega-projects under development in mining and hydrocarbons have the potential to generate large tax revenues which can then be used for government investment in social programs and public infrastructure. But he is worried about the fact that the Southern African nation has fallen seven places in the World Bank\'s annual \"Doing Business\" report, which supposedly measures the ease or otherwise of doing business in the economies covered. In the latest report, issued last week, Mozambique\'s ranking fell from 139 to 146 out of 185 countries. On taxation, the report claims that companies must make 37 tax payments a year, and the paperwork involved takes 230 hours.