The International Monetary Fund (IMF) made the remarks adding that this was reflecting strong activity in all sectors, especially extractive industries, construction, transport and communication, commerce and financial services.
The group also noted that risks to this outlook have increased somewhat recently with the decline in commodity prices in world markets, especially for coal, and uncertainty about the large Liquefied Natural Gas (LNG) projects.
“While substantial natural resource revenues are 6-10 years away, efforts are needed to put in place adequate institutional arrangements and capacity to address the large new challenges associated with this sector and the promise it holds for the country,” said Doris Ross, leader of the IMF delegation to Mozambique.
“Inflation remains well-contained thanks to an increase in domestic food production and a decline in import prices. Average inflation stood at just 1.4 per cent in September, well below the same period last year, and is expected to remain below 3 per cent for 2014 as a whole.”
The group also said the external current account deficit is large due to imports for big investment projects financed by foreign direct investment (FDI) adding that the international reserve coverage seems broadly adequate.
The mission urged the authorities to step up implementation of key structural reforms, especially in the public financial management (PFM) 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,” added Ross.
“Regarding economic policies for the rest of 2014 and 2015, the staff team and the authorities agreed on the need to maintain revenue efforts and slow the growth of public spending, including the wage bill, goods and services and investment while enhancing the efficiency of spending, in order to preserve debt sustainability in the medium term.”
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 social assistance programs.
The IMF also said authorities were appropriately committed to further strengthening their management of public resources, including by adopting a fiscal rule to improve the management of windfall revenue.
The group added that the government was also committed to enhancing the transparency and efficiency of public investment, strengthening the management of public enterprises and disclosing the audited annual reports of the largest ones.
The team met with President-elect Filipe Nyusi, Finance Minister Manuel Chang, Planning and Development Minister AiubaCuereneia, Bank of Mozambique Governor Ernesto Gove.
It also met with the presidential candidates of the three main parties.