End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.
Performance in some sectors of the economy has improved since the latter part of 2016.
Growth declined to 3.8 percent in 2016 and is now projected to edge up to 4.7 percent in 2017.
Publication of the detailed summary of the Kroll audit report is welcomed; more needs to be done to fill the information gaps on the use of loan proceeds.
An International Monetary Fund (IMF) staff team led by Michel Lazare visited Mozambique from July 10-19, 2017 to discuss with the authorities measures needed to follow up on the recent audit report of EMATUM, Proindicus, and MAM public sector companies. The team also assessed recent economic developments and discussed monetary and fiscal policies in the context of the 2018 budget.
At the end of the visit, Mr. Lazare issued the following statement:
“Performance in some sectors of the economy has improved since the latter part of 2016. The decisive October 2016 monetary policy tightening helped rebalance the foreign exchange market and resulted in the metical appreciating by about 30 percent vis-à-vis the US dollar since end-September 2016. This monetary stance contributed also to a decline in inflation from a year-on-year peak of 26 percent in November 2016 to about 18 percent in June, despite a large increase in fuel prices in March. Moreover, higher international coal prices and a marked increase in coal export volumes helped narrow the trade and current account deficits of the balance of payments, supporting a large accumulation of international reserves, which at end-June covered about 6 months of non-megaproject imports. On the fiscal front, the government took important steps by removing wheat and fuel subsidies and reinstating the old automatic fuel price mechanism in March.
“However, the overall outlook remains challenging. Growth declined to 3.8 percent in 2016 and is now projected to edge up to 4.7 percent in 2017, mainly on account of a surge in coal production and exports. Inflation remains elevated but is expected to decline further. Despite budget cuts in investment and in the purchase of goods and services, increased spending on wages and salaries continues to put pressure on the budget, contributing to a large accumulation of domestic arrears. Total public debt, mostly denominated in foreign currency, remains in distress and the government missed external debt payments.
“Macroeconomic policy discussions centered on the urgent need to further consolidate public finances. The team emphasized that a strong commitment to fiscal adjustment is an essential element to ensure policy sustainability, foster a decline in inflation and interest rates, limit further increases in public debt, while at the same time facilitate debt restructuring. The team stressed that the 2018 budget should decisively reduce the fiscal deficit. It should focus on eliminating tax exemptions (including for VAT), containing the expansion of the wage bill, and prioritizing the implementation of only the most critical public investments while avoiding the further accumulation of arrears. Protecting critical social programs and reinforcing the social safety net should cushion the impact of these measures on the most vulnerable segments of the population. Urgent action is also needed to strengthen the financial position of loss-making companies and limit the fiscal risks they represent.
“On the monetary side, the team welcomed the recent introduction of the new monetary policy regime centering on the use of a new policy rate (MIMO) as the central bank’s main instrument of monetary policy. The team acknowledged the strong commitment of the central bank to reduce inflation. To address financial sector vulnerabilities, the team urged the central bank to remain vigilant to risks, ensure adequate liquidity provision to the economy, and continue to step up supervision and enforcement of prudential regulations.
“The team welcomed the publication of the detailed summary of the Kroll audit report by the Public Prosecutor’s Office as an important step towards greater transparency regarding the borrowing undertaken by the Ematum, Proindicus, and MAM public companies. However, as highlighted in a June 24 press statement 17/243, while the report summary provides useful information on how the loans were contracted and on assets purchased by the companies, critical information gaps remain unaddressed regarding the use of loans proceeds. The team urged the government to take steps to fill the information gaps and to enhance its action plan to strengthen transparency, improve governance, and ensure accountability.
“The team met with Prime Minister Carlos do Rosario, Minister of the Economy and Finance Adriano Maleiane, Bank of Mozambique Governor Rogerio Zandamela, Public Prosecutor Beatriz Buchili, senior government officials, representatives from the Parliament, private sector, and the donor community.
“The team thanks the authorities for their continued hospitality.”
IMF Communications Department
PRESS OFFICER: Andrew Kanyegirire
Phone: +1 202 623-7100Email: MEDIA@IMF.org
Ibo Fortress In Mozambique Gets A Make-Over To Boost Tourism
The rehabilitation of the São João Baptista Fortress in the Ibo Island district, part of the government’s efforts to boost tourism in this part of Cabo Delgado province, will be completed next year.
The announcement was made by Cabo Delgado Celmira da Silva during her presentation of the 2018 Economic and Social Plan and budget to the provincial assembly a few days ago.
The idea is to transform the Fort of São João Baptista do Ibo into a tourist attraction and open up the space for other community and commercial activities.
The government started efforts to finance the rehabilitation works with cooperation partners last year, with the Provincial Directorate of Education and Human Development taking the lead.
Built in 1781 and last restored in 1953, the Fort of São João Baptista do Ibo is the second largest fortification of Mozambique. Star-shaped and located next to the sea, the fortress has interior buildings able to house about 300 men and a chapel, as well as 15 iron cannon.
In addition to the São João Baptista fort, Ibo also has the 1760 Fortim de São José, which it replaced, and the 1847 Santo António do Ibo fort that once defended the local port.
Ibo was elevated to the category of village in 1761 after the detaching of the province of Mozambique from the Portuguese State of India in 1752, thus becoming the first capital of Cabo Delgado.
Its government was installed in 1763, and comprised a municipal council and court.
Ibo saw its economic apogee at the time of the slave trade, whose abolition spelt a slow economic decline that was consummated, politically, with the transfer of the last divisions of the administration of Cabo Delgado to Pemba (then called Port Amelia) in 1929.
- The Qurimbas archipelago consists of about 32 islands, including Ibo, Matemo, Medjumbe, Quirimba, Metundo, Quisiva, Vamizi Island and Rolas Island all going up to the Tanzanian border. The Quirimbas National Park, spanning an area of 7,500 square kilometres (2,900 sq mi), includes the 11 most southerly islands, which are partly surrounded by mangroves. The park was established in 2002 as a protected area
Mozambique – President Nyusi Knocks Labour Officials For Their Indifference On Employer – Workers Dispute
Mozambican President Filipe Nyusi on Thursday urged leaders and officials of the Labour Ministry not to wait for the outbreak of disputes between employers and workers before attempting to mediate between them.
He made this appeal in the northern city of Lichinga, at the inauguration of the new offices of the Niassa Provincial Directorate of Labour, Employment and Social Security.
“I want to urge all leaders and staff of the Labour Ministry not to wait for conflicts to erupt. You have to avoid them”, said Nyusi. “We have to exercise our constitutional power of directing governance processes”.
He was aware of the fact that there are still companies who deduct social security contributions from their workers’ wages, but then do not pass the money on to the National Social Security Institute (INSS).
“We also know that pension funds have not always been handled responsibly and with the maximum transparency”, Nyusi added. “Workers are still systematically fired in an unjust and illegal manner. There are still workers who have no contracts, and some employers do not obey the rules of workplace hygiene and safety, thus putting their workers at risk”.
He urged Labour Ministry staff not to rest “faced with lack of compliance by the various stakeholders in the chain of labour and employment”.
“We are not just celebrating the inauguration of a building”, said Nyusi. “We are here to transmit a message of greater pragmatism in the actions of the management of the labour sector to reverse the current situation”.
The President noted that surveys held in 2015 put the average rate of unemployment in Mozambique at 21.6 per cent, but the rate in Niassa was well above the average, at 25.6 per cent.
“Hence the creation of more jobs for our young people has been one of the cornerstones of our governance”, Nyusi said. “Work and employment give people dignity, as well as being one of the most visible forms of the distribution of wealth and of economic inclusion”.
He claimed that in the first two years of his government (2015-2016) 560,000 jobs had been created. Of these, 12,605 were created in Niassa. In these two years, 20,000 new companies had been registered, 544 of them in Niassa.
“During the first two years of our governance, we have been bringing together the desires of the government, entrepreneurs and workers in the sphere of promoting employment, dialogue and social protection”, said Nyusi.
The government had also concentrated on training programmes, including the use of 20 mobile professional training units.”As a result of our partnership with the private sector, we have trained, throughout the country, about 236,000 citizens”, said Nyusi.
Although only 5,575 of these are women, Nyusi declared that the government is committed to promoting gender equality and equity in all spheres of socio-economic development.
Mozambique – Rain Of Goals As Moçambola 2017 Kicks Off
The opening day of Moçambola 2017, which started on Saturday and ended yesterday, produced 17 goals in all eight matches.
MAPUTO- The first goal of the race was scored by Maxaquene’s central defender Nelson in the match against the Maputo Railroad at the National Stadium of Zimpeto.
In the opening day, it is also worth mentioning for UP Lichinga’s successful debut, who defeated the Chingale 1-0, while also the first-division AD Macuácua went to Chimoio to draw with Textáfrica to a ball.
The next day opens on Wednesday with the anticipated match between Ferroviário da Beira and UP Lichinga, as the “locomotives” play next weekend’s first and last round of access to the group stage of the Champions League . [FM]
Drone Crashes into Passenger Plane about to Land
The Aviation Herald is reporting that a passenger jet in Mozambique has collided with a drone, causing significant damage to the plane’s nose cone. The Linhas Aereas de Mocambique (LAM) Boeing 737-700, which was en-route from Maputo to Tete, encountered the drone as it was on final approach. As it was landing, the crew of the passenger jet heard a large bang, which they assumed was a bird strike.
Get the latest CES 2017 news TNW is at CES 2017! Get the low-down on the latest and most insane tech being showcased in Las Vegas. FEED ME TECH According to the Aviation Herald, a post-flight examination of the damaged aircraft revealed it was a drone.
It is not yet known who was piloting it, or what kind of drone it was. Images posted by the Aviation Herald show the extent of the damage to the aircraft’s radome. Thankfully, nobody was hurt. The 737, which was delivered to LAM in 2014 by the Mexican airline Aeromexico, is currently undergoing repairs.
A replacement aircraft was dispatched by the airline to Tete, in order to complete the return leg of the trip. Despite a number of near-misses, so far we’ve been extremely lucky. Nobody has died as a consequence of a drone colliding with an airplane.
It’s only ever happened once before, with a British Airways A320 flying from Geneva to London. But with this incident in Mozambique, it looks like our luck is running out. Frankly, the drone enthusiast community needs to do a better job of educating its members about the risks and potential consequences of flying near airports.
But law enforcement and local civil aviation authorities also have a role to play. They need to ensure that there are countermeasures and deterrents to prevent drones geting anywhere near airports.
Mozambique oil and gas search reaches Marracuene and Manhiça
From next year, Marracuene and Manhiça districts in Maputo province will be the scene of seismic and geophysical surveying aimed at identifying oil and gas reserves. A consortium including UK firm Delonex Energy and the Indian Oil Corporation will explore the nine thousand square kilometer region.
National Petroleum Institute research administrator Augusto Mucavele indicates that the INP, Delonex Energy (DE) and Indian Oil Corporation (IOC) are expecting to sign a contract whose terms are currently being finalised for submission to the Council of Ministers.
The area, which was analyzed superficially some years ago, is being called the ‘Palmeiras Area’, and Delonex Energy and the Indian Oil Corporation are expected to spend a minimum of US$70 million drilling at least two exploration holes.
These will be used to determine the presence or absence of hydrocarbons in the southern area of the country, and, if they render positive results, further research will be undertaken to determine the size of the reserves.
“The first investigation we made was not sufficient to furnish detailed, conclusive results, but the geological evolution of the area shows that there is potential that must be examined in depth,” he said.
The award procedure started about a year ago with the announcement of the results of the international tender. Discussions started this month and it is expected that a contract will be sent to the Council of Ministers “as soon as possible”.
Mucavele said that, if there were no surprises, the contract could be signed this year. “Then companies must comply with a set of requirements enshrined in law, with the emphasis on the environmental and social component. They must secure an environmental license and, if deemed necessary, carry out public consultations.”
Mucavele explains that the area in this case was large because the degree of geological knowledge of it is limited, requiring studies that could be considered ‘from scratch’.
“On the other hand, it is not easy to delineate the area under investigation without a research prospectus. We are facing a “green field”, meaning, an area where we have a limited knowledge. But this does not mean that companies will take these areas permanently. There is an abandonment clause that will certainly be followed,” he stresses.
The abandonment clause provides that, if the area is analyzed and the results are negative, it is ‘abandoned’. The INP belief is that, out of the nine thousand square kilometres, Delonex Energy and the Indian Oil Corporation will abandon 4,500 square kilometres (half) in order to focus on the area where there are the most positive signs.
The Palmeiras area is one of six blocks recently awarded under the fifth international tender for research and hydrocarbons in the national territory, along with two blocks in Angoche, two in the Zambezi Delta and one in Pande and Temane.
Several well-known companies have participated in the race to secure the 11 blocks made available, with the Italian Ente Nazionale Idrocarburi (ENI) and the US Exxon Mobil pre-selected for two areas located off the Angoche district of Nampula province.
Exxon Mobil also secured the two areas in the Zambezi Delta, with Sasol winning the Pande and Temane area in Inhambane province.
“All these areas are currently in the interaction phase, with the final contracts subject to Council of Ministers approval,” Mucavele said.
More shark attacks in Inhambane Bay, Mozambique
Every year, shark attacks resulting in dozens of deaths occur along the coast of Inhambane Province in southern Mozambique, usually on sandbars where the animals feed.
Andrea Marshall, coordinator of the Tofo Beach-based marine protection Megafauna Foundation, told DW Africa that awareness campaigns aimed at curtailing attacks is already being carried out in local communities.
Preventing deaths is the goal, according to Marshal. “We are working with communities to raise awareness of some rules that can protect them from shark attacks and reduce the number of attacks.”
Rules include avoiding the water at dusk or at night when sharks are looking for food, not going in the sea if the person is bleeding, because shark can smell blood hundreds of meters away, and not wearing bright clothing, because the reflected light looks like fish scales to the shark.
Marshall also points out that the conflict between sharks and humans in Inhambane Bay is not new, but that attacks have increased in recent years because of increasing population density.
“People entering the sea do not seem to be aware that there are animals living there,” Marshall says. “It is different to, say, a forest, where we can see animals playing. People should be very careful in the sea, and only go to places they already know. They should also always have company.”
Marshall told DW Africa that lack of resources, including financial, has hampered research work and the protection of endangered marine species along the Mozambican coast.
“Is this the sharks mating season?” she asks. “Unfortunately, we cannot answer because this organisation is new and only began operating recently. If we had funds, we could undertake more detailed studies.”
The Megafauna Foundation undertakes action to protect marine species, most notably sharks, which have, to the consternation of residents, recently attacked fishermen in Inhambane Bay.
Source: Deutsche Welle
Mozambican designers hit the catwalk in Lisbon Fashion Week
Mozambican fashion designers Shaazia Adam, Omar Adelino and the duo ‘Ideias a Metro’ (Ideas by the Metre) are participating in the Portugal Fashion expo until tomorrow Saturday, March 19, as part of a partnership between Mozambique Fashion Week and Portugal Fashion established by Vodacom in 2015.
The first collection on the catwalk will be Ideas by the Metre, a duo comprising Carla Pinto and Nela Avelar. Their collection is based on the brand’s basic concept: modern, urban clothes made exclusively from traditional African fabrics.
Omar Adelino, award-winning Best Young Designer at the Vodacom Mozambique Fashion Week 2015 will be next up.
Closing Mozambique’s participation will be 25-year-old Shaazia Adam, well known for the elegance and sophistication of her designs.
Mozambique – 5,5 Magnitude Earthquake Hits Central Mozambique
An earthquake, magnitude 5.5 on the Richter scale, hit central Mozambique yesterday 22 September 2016 at 10:06 PM.
A National Mining Institute statement sent to Folha de Maputo says the earthquake epicenter was in Machaze district, Manica province, and the shock was felt in Gaza, Inhambane and Sofal as well.
In Manica province, the earthquake was felt in Machaze, Mossurize Sussendenga, Macate, Vanduzi, Gondola and Chimoio districts. In Gaza, it was felt in Massangena, Chicualacuala, Chigubo, Massingir, Guija and Chibuto districts.
In Sofala, it was felt in Machanga , Chibabava, Buzi, Nhamatanda, Gorongosa, Mwanza, Dondo and Beira districts. In Inhambane, it was felt in Mabote, Govuro, Inhassoro, Funhalouro, Vilanculos and Massinga districts.
No loss of life or material damages has yet been reported in human lives. The National Institute of Mines (INAMI), the entity responsible for monitoring seismic activity in Mozambique, is on the ground monitoring the situation.
Mozambique – Qatar considers joining Exxon’s Mozambique gas move
Qatar Petroleum is interested in the Mozambique gas business of Italian energy group Eni and could opt to join Exxon Mobil in buying a multibillion-dollar stake, sources familiar with the matter said.
State-controlled Eni is looking to reduce a 50 percent stake in its giant Mozambique gas acreage as part of plans to sell 5 billion euros of assets over the next two years. Last month sources told Reuters Exxon had reached a deal that could give it an operating stake in the onshore liquefied natural gas (LNG) export plant, while leaving Eni in control of the Area 4 gas fields feeding it.
Qatar Petroleum is in talks with Exxon and Eni on some kind of involvement in Mozambique which could involve a joint investment with the U.S. major, one senior QP source said, adding the deal was not a classic joint venture structure. A second Doha-based source, who declined to be named as not authorized to speak publicly, said Qatar Petroleum had been looking at Eni’s Area 4 field as well as adjoining acreage of Anadarko Petroleum Corp but added the focus was on Eni.
“The expectation is that Qatar Petroleum and Exxon will go in on this together,” the source said, adding a Qatar Petroleum delegation planned to visit Mozambique before the year end. The sources cautioned no decision had as yet been taken by the Qatari company. Qatar Petroleum did not respond to requests for comment and Exxon and Eni declined to comment. Saad al-Kaabi, Qatar Petroleum CEO, recently confirmed the group was looking at assets in Africa.
Located in Mozambique’s Rovuma Basin, Eni’s Area 4 is one of the biggest discoveries of recent times, holding about 85 trillion cubic feet of gas. Eni CEO Claudio Descalzi, who has spoken of selling a stake of up to 25 percent, said earlier this month a detailed agreement had been reached with a partner. In 2013 Eni sold 20 percent of Area 4 to China’s CNPC for $4.2 billion but since then oil and gas prices have dropped by more than half. A banker with knowledge of the matter said a 25 percent stake in the field could be worth in the region of 2 billion euros.
Exxon and QP are already close business partners in Qatar, where Exxon’s technical know-how helped the tiny Gulf state to develop its gas resources and become the world’s biggest as well as lowest-cost LNG producer.
Since then, both companies have jointly moved to exploit international LNG growth opportunities, including plans to build the Golden Pass liquefaction plant in the United States and bidding for exploration acreage in Cyprus.
A moratorium on new Qatari gas production since 2005 has hobbled domestic expansion opportunities at a time of intense competition for global LNG market share as new producers such as Australia challenge Qatar’s dominance. “The (Mozambique) gas will go east and so having Qatar on board with all its experience makes a lot of sense,” a banker with knowledge of the matter said.
Mozambique – Secret Debt, IMF and donors outraged
Donors stopped budget support and the IMF cut off its loan when the $2.2 bn in secret debt was revealed earlier this year. Budget support donors have left it for the IMF to negotiate a new agreement, so that deal will be at the top of Zandamela’s list – and his appointment itself is probably the first step in that negotiation.
Donors and the IMF have been calling for an international and independent forensic audit, which would identify over-pricing and commissions, and would be expected to point fingers at those who benefitted in the Armando Guebuza government. Government has resisted. When President Filipe Nyusi swore in Zandamela Thursday, he said pointedly: “do not be surprised nor alarmed by what may be pressure from outside. Mozambique is your land and it is for her that you should make your best efforts.” (Lusa 1 Sep) That seems a warning not to accept a forensic audit. Is that possible? The IMF has been taking a hard line, and departing IMF representative Alex Segura continued to demand a forensic audit. (Savana 2 Sep) The new resident representative is Brazilian Ari Aisen, who has been a senior economist at the IMF in Washington.
But with two hard liners, Segura and the head of the Africa department, both leaving, there will be an entirely new negotiating team – with IMF people on both sides of the table. And Nyusi will try to calm the troubled waters when he meets IMF head Christine Lagarde in Washington in two weeks. The next IMF mission arrives in Maputo in three weeks.
A probable deal would be to give the IMF everything it wants on the fiscal side in exchange for no forensic audit. That would probably involve taking all the debt onto the state budget. In a recent blog, Lagarde called for more structural reform and a renewed commitment to free trade. For Mozambique, the first would mean further privatizations and government austerity, including restrictions on government wages (which has been a continued IMF demand), while the second would prevent any attempt to protect Mozambican producers from foreign competition. But Lagarde again repeated something that has become a hallmark of her role in the IMF, which is the need to reverse increasing inequality. Segura unsuccessfully pushed this issue in Mozambique, and warned in January that “high levels of inequality hamper government policies to reduce poverty [and] can lead to political instability”. (Mozambique News reports & clippings 308) Will the new IMF team also push for reduced inequality?
By: Josephn Hanlon