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Press Release
Conference on Economic Challenges and Opportunities Ends with Recommendations for the Future
Maputo, March 25, 2010
The Government of Mozambique, in close coordination with the World Bank and the International Monetary Fund, organized a high-level conference on the future economic challenges and opportunities for Mozambique. The conference took place in Namaacha in Southern Mozambique from March 22-24, 2010, with over 100 participants from the government, the central bank, civil society, the private sector, academia, and development partners. The conclusions of the conference were discussed in a meeting of the Council of Ministers in Maputo on March 25, 2010, chaired by His Excellency the Prime Minister. World Bank and IMF staff were invited to join the policymakers’ discussions.
The conference provided a unique opportunity for an exchange of views on Mozambique’s economic performance to date and its specific policy challenges going forward. Economic growth over the last two decades has been impressive. Looking ahead, the authorities expressed a strong desire to further accelerate the country’s economic development to help make more segments of the population benefit from an improvement in living standards. Participants discussed several ways to achieve this objective, including improvements in the business environment to help promote private sector activity, enhancements in productivity in key sectors (such as agriculture), the potential benefits of stronger regional trade, and a scaling up of public investment to develop infrastructure. It was recognized that all such efforts would need to be embedded in a continued pursuit of macroeconomic stability.
“Soundmacroeconomic policies and structural reforms have underpinned 20 years of impressive economic growth in Mozambique, which has become an example for other countries in Africa”, said Johannes Mueller, IMF Mission Chief for Mozambique. “Increased public investment in infrastructure can promote further economic development provided such investment has a high rate of return and helps generate additional private sector investment as well. In order to maintain macroeconomic stability, it will be important to follow a cautious approach in accessing external non-concessional borrowing.”
A major focus of the conference was on how to increase public investment in infrastructure in the context of limited financial resources. Various financing options were considered that the authorities indicated they would study further while reiterating their commitment to macroeconomic stability and a prudent public debt management. Participants discussed the importance of a proper prioritization of investment projects to ensure that they will be conducive to supporting private sector activity and raising economic growth. It was also emphasized that finding additional financing for infrastructure investments is only a part of what is required for faster economic growth, and needs to be complemented by greater improvements in the business environment, reducing red tape, allowing for more flexibility in land and labor markets, and improving the logistics for trade.
“A higher sustainable growth pattern can probably be reached by further utilization and integration of existing infrastructure using spatial development planning , multi-modal approaches, regional synergies and inter-sectoral upstream and downstream linkages. Hence, in addition to sound, high return investments in infrastructure, policies need to consider facilitating microeconomic, business environment reforms to ensure that investments in infrastructure can produce multipliers to generate economic activity, create wealth and reduce poverty”, saidLuiz Pereira da Silva, World Bank Country Director for Mozambique, Angola, Malawi, Zambia, and Zimbabwe. “Mozambique has an enormous potential for even stronger but also more widespread economic growth. There seems to be a consensus on keeping macroeconomic stability, the challenge is now to unleash such potential by attracting and nurturing a class of new private sector entrepreneurs.”
In concluding the conference, the IMF and the World Bank reaffirmed their commitment to work with the Government to help it realize its vision to accelerate economic growth and reduce poverty, through prudent macroeconomic management, increased infrastructure investments, continued investment in human capital, and a better environment for private sector activity.
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