Country Report Mozambique June 2011

Outlook for 2011-12: International relations

The government will remain highly dependent on aid from donors, which accounts for around one-half of fiscal revenue. Although the relationship with donors has been damaged by concerns over governance, we do not expect significant deterioration in relations or a major drop in aid inflows. Ties with South Africa, Mozambique's main trading partner, will remain strong, driven by foreign direct investment (FDI) inflows and long-standing commercial links. Strong commercial, political and personal ties will ensure continued close relations with Portugal, which will remain a key source of FDI and diplomatic support. Investment from China, Brazil and India, particularly in railways and mining, will help to strengthen ties with those countries.

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