Country Report Mozambique June 2011

Outlook for 2011-12: Policy trends

Policy in the outlook period will be guided by the three-year policy support instrument (PSI) agreed with the IMF in June 2010, as well as the government's five-year strategy paper, Programa Quinquenal do Governo para 2010-14. The objectives of the latest PSI include unwinding some of the fiscal stimulus policies enacted during the global economic slowdown between 2008 and 2010. The PSI aims to keep the primary deficit stable and to develop a debt-management strategy. The five-year strategy, meanwhile, aims to cut poverty, improve social development and foster key sectors, including agriculture, fishing, minerals, tourism and transport. A programme of reforms to tax policy and collection, public financial management and the supervision of banks will continue from the previous PSI. However, progress in these structural reforms is expected to be slow, owing to both the scale of the challenges to be overcome and the fact that many officials have vested interests in preserving the inefficient status quo.

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