By Judith Ugwumadu | 7 November 2014

The International Monetary Fund has urged Mozambique to step up its public financial management reform after finding that performance under the three-year policy support programme was mixed.

Concluding a mission visit to Mozambique, the fund called for fiscal prudence, more inclusive growth and greater public investment in transparency.

IMF mission leader Doris Ross said: ‘Recent programme performance is mixed. The mission urged [Mozambique] to step up implementation of key structural reforms, especially in the public financial management area, financial system and market development.

‘A focus on rural infrastructure development and further improvements in the business environment should help make growth more inclusive by enhancing agricultural productivity and job creation in the private sector.’

The Southeast African country and the IMF agreed that economic policies for the rest of 2014 and 2015 should increase efforts to boost revenue and slow the growth of public spending.

‘While the 2015 budget should begin to narrow the fiscal deficit, this should be achieved in a manner that protects social spending such as basic health and education, and community assistant programmes,’ said Ross.

‘As economic challenges become more complex, the authorities should continue to sharpen their tools to monitor and guide microeconomic developments.’

Mozambique’s economic performance remains robust, the IMF noted, with growth projected to reach 7.5% in both 2014 and 2015 reflecting strong activity in all sectors, especially extractive industries, construction, transport and communication, commerce and financial services.

The IMF agreed a three-year Policy Support Instrument with Mozambique in June 2013. Such instruments are designed for countries that do not need financial support but do require help to design effective economic programmes.