Country Report Mozambique June 2011

Highlights

Outlook for 2011-12

  • The ruling party, Frente de Libertação de Moçambique (Frelimo), will dominate politically in 2011-12. However, if the president, Armando Guebuza, tries to change the constitution to run for another term, the party could split.
  • Bloody riots that erupted in September 2010 in the capital, Maputo, indicate that the biggest risk to social stability is rapid consumer price inflation, which global commodity price rises could stoke.
  • The Economist Intelligence Unit forecasts a fiscal deficit equivalent to 6% of GDP in 2011, narrowing to 5% of GDP in 2012 as subsidies are unwound to take advantage of lower global commodity prices.
  • Real GDP growth is expected to remain brisk in 2011-12, averaging 7.4% a year, on the back of increasing inflows of foreign aid and foreign direct investment into minerals and infrastructure mega-projects.
  • In line with the latest outlook for global commodity prices and expected losses to local agricultural output resulting from flooding, inflation is forecast to average 7.5% in 2011, before easing to 5% in 2012.
  • Given our recent upward revision to forecast global oil prices, we now expect the current-account deficit to widen to 15.7% of GDP in 2011 (12.8% previously), before narrowing to 12% of GDP in 2012 (9.6% previously).

Monthly review

  • New legislation relating to state benefits for veterans of the civil war, which ended in 1994, has stirred up old grievances between Frelimo and the main opposition party, Resistência Nacional de Moçambique (Renamo).
  • Renamo has boycotted a recent parliamentary session discussing constitutional reform. The party fears that Frelimo hopes to change the constitution to allow Mr Guebuza to stand for re-election.
  • The government has announced that it is considering renegotiating extant contracts for the mega-projects, which are funded by foreign direct investment, to increase their contribution to the economy and public finances.
  • The annual negotiations between the government, unions and employers have resulted in higher minimum wage rates in all sectors. However, in real terms, most rises are small and wage levels remain very low in general.
  • Following the latest annual review of the government's and donors' performance, a total of US$689m in budgetary aid has been pledged for 2011.
  • A Brazilian firm, Vale, has begun production at its coalmine in Moatize, Tete province. Coal exports are due to start by July this year. Vale initially plans to produce 1m tonnes of coal in 2011, rising to 11m tonnes by 2014.

Outlook for 2011-12: Political stability

The ruling party, Frente de Libertação de Moçambique (Frelimo), is set to remain the dominant figure in the political and economic landscape throughout the forecast period following its crushing but flawed victory in the legislative and presidential elections held in October 2009. After more than five years in power, the president, Armando Guebuza, has consolidated his influence and can rely on the support of the security services. Mr Guebuza's micromanagement and the centralisation of power in the presidency have weakened the tradition of debate inside Frelimo. As a result, there are grave concerns that this is undermining the effectiveness of government decision-making and management. Moreover, there are reports that Mr Guebuza's high-handed style and perceived cronyism are alienating many within Frelimo. If he does attempt to change the constitution to run for another term in office-which the Economist Intelligence Unit currently does not expect-internal tensions will increase markedly. A split within the ruling party is therefore conceivable, possibly pitting the new generation of meritocrats against the old guard of civil war veterans. The risk of this is set to increase as the presidential election in 2014 approaches.

Bloody riots that erupted in September 2010 in the capital, Maputo, indicate that rises in the cost of living pose a greater threat to Frelimo's hegemony than do the enfeebled opposition parties. The unrest was brutally repressed by the security services, resulting in several deaths, before the government was forced to capitulate and reinstate some price controls. The government's acquiescence may set a precedent for social unrest to win concessions. New schemes to supply subsidised fuel and food to the most vulnerable groups should assuage popular anger in the short term. However, the imminent withdrawal of general price subsidies may provoke the ire of groups that miss out. Although the country's minerals boom will be a welcome source of jobs, it may sharpen inequality and increase frustration among the majority of people who will not directly benefit from it. Consequently, the risk of further such instability in 2011-12 is considerable. In addition to price rises, other triggers for future unrest could include power cuts, a localised rise in unemployment or a delayed official response to a disease outbreak or flooding. Overall, we expect political stability to deteriorate slightly in the forecast period.

Outlook for 2011-12: Election watch

The next national and presidential elections are not due until late 2014. However, before then jockeying for position is likely among potential successors to Mr Guebuza, who cannot serve another term in office. The political opposition will undergo significant change over the next few years, as the previously dominant opposition party, Resistência Nacional de Moçambique (Renamo), is in disarray and may gradually be supplanted by a new challenger, the Movimento Democrático de Moçambique (MDM), to which it is losing talent and support. There are signs of a split emerging within Renamo, with many members growing frustrated with the leadership of Afonso Dhlakama, who is viewed as becoming increasingly out of touch. However, the MDM will have to work hard to capitalise on Renamo's weakness, as the party has yet to make much impact outside Beira, where its leader, Daviz Simango, is mayor.

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.

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.

Outlook for 2011-12: Fiscal policy

The 2011 budget, approved by parliament in December, provides for total expenditure of MT132.4bn (US$4.1bn), officially forecast at equivalent to 31.1% of GDP. Current spending, one-half of which is accounted for by public-sector wages, is budgeted at MT68.8bn. This is just over 50% of total spending and forecast at equivalent to 18.3% of GDP. Capital spending of MT60bn (around 16% of GDP) is set to rise by nearly 15% on the latest estimates of executed spending in 2010. Investment in agriculture is budgeted at just MT1.6bn, less than 10% of the MT19bn allocated to capital spending on infrastructure. Education and health, meanwhile, are set to receive MT3.6bn and MT2.3bn in capital spending respectively.

As regards revenue, the domestic component is expected to rise by a brisk 19.5% on the latest estimates for outturn in 2010, to MT73.3bn. The increase is expected to be led by higher income tax receipts, which are projected to rise by 34% on 2010 estimates to MT23.4bn, on the back of rapid economic growth and improved collection. External revenue is budgeted at MT58.1bn (44% of the total). Total revenue is set to rise by nearly 15% on the latest estimates of outturn in 2010. Overall, we expect a fiscal deficit equivalent to 6% of GDP in 2011. We expect foreign aid to stagnate in real terms in 2012, although domestic revenue should continue to pick up strongly on the back of still rapid growth. We expect spending growth to be slower in that year as subsidies are slowly unwound. Consequently, we expect a slightly narrower fiscal deficit in 2012, equivalent to 5% of GDP.

Outlook for 2011-12: Monetary policy

In 2011 we expect that the key policies of the central bank, Banco de Moçambique (BDM), will be to restrain money supply growth and keep the currency, the metical, steady in order to check imported inflation, which poses a threat to social stability. The BDM is expected to let the currency weaken slightly in 2012, in order to boost export competitiveness and take advantage of the forecast drop in global commodity prices. Although the BDM formally targets sustainable levels of monetary aggregates, policy will increasingly prioritise keeping inflation in check, even if this requires further strengthening of the metical.

Outlook for 2011-12: International assumptions

International assumptions summary
(% unless otherwise indicated)
 2009201020112012
Real GDP growth
World-0.74.94.34.2
OECD-3.52.92.52.3
EU27-4.21.82.01.7
Exchange rates
¥:US$93.787.982.381.0
US$:€1.3931.3261.3671.263
SDR:US$0.6460.6520.6350.653
Financial indicators
¥ 3-month money market rate0.390.170.270.60
US$ 3-month commercial paper rate0.260.260.320.70
Commodity prices
Oil (Brent; US$/b)61.979.6108.594.5
Aluminium (US$/tonne)1,706.82,172.62,575.02,496.3
Food, feedstuffs & beverages (% change in US$ terms)-20.411.730.0-11.8
Industrial raw materials (% change in US$ terms)-25.644.529.3-10.4
Note. Regional GDP growth rates weighted using purchasing power parity exchange rates.

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Outlook for 2011-12: Economic growth

According to the latest IMF estimate, real GDP grew by 6.5% in 2010, down on the 8.5% previously estimated. Growth is expected to remain brisk in 2011 on the back of increasing inflows of FDI into minerals and infrastructure mega-projects, as well as ongoing donor contributions. Agriculture will benefit from growth in the output of food and cash crops, as well as from the implementation of the government's national food production plan. Output from industry is expected to rise briskly on the back of strong inflows of foreign investment into the minerals sector, particularly to develop coal reserves. However, industrial production will remain below potential owing to the fitful power supply. The services sector is also expected to continue the strong performance registered in 2010. In particular, the hotel and restaurant sector and financial services are expected to attract increasing amounts of foreign investment. Growth is expected to accelerate to 7.3% in 2011 and 7.5% in 2012, largely on the back of increased coal production.

Outlook for 2011-12: Inflation

World commodity prices are expected to rise briskly in 2011. Of particular relevance to inflation in Mozambique is the outlook for global food prices, as the country is highly dependent on imports of food, which has a heavy weighting in the consumer price basket. We expect global food prices to rise by 30% in 2011. However, government subsidies will lead to a lower local inflation rate, which we forecast at an average of 7.5%. World commodity prices are expected to ease slightly in 2012 as monetary policy tightens worldwide, encouraging a withdrawal of investment from commodities (speculation having partly driven the rapid rise in prices in 2010). However, the government is likely to use this opportunity to withdraw fiscally unsustainable subsidies, so the impact on inflation will be broadly neutral. Consequently, we expect inflation to ease only slightly in 2012, to an average of 5%.

Outlook for 2011-12: Exchange rates

In view of recent rapid imported consumer price inflation, efforts to reduce the metical's overvaluation to boost export competitiveness are now likely to be put on hold. Through its interventions, the BDM appears to have put a floor under the value of the metical at around MT37:US$1 and MT5.1:R1 since July 2010. We expect the recent unrest over the cost of living to encourage the authorities to let the metical strengthen slightly amid strong expected inflows of foreign investment in 2011. Consequently, we forecast that the exchange rate will average MT32:US$1 in 2011 and MT31:US$1 in 2012.

Outlook for 2011-12: External sector

The outlook for Mozambique's aluminium-dominated exports is positive, as global demand is expected to grow by an average of 5.7% a year in 2011-12, even though prices are set to weaken slightly in 2012 after a brisk rise in 2011. The other two main exports, gas and electricity, are governed by fixed contracts with buyers in South Africa that are priced in rand, and any changes in value will reflect fluctuations in the rand:dollar exchange rate. Coal exports could make a significant contribution from late 2011, but they may be delayed owing to a lack of associated infrastructure. The planned expansion of gas exports should have a positive impact by end-2011. Agricultural export volumes are expected to increase in response to government investment in the sector. In line with our latest commodity price forecasts, we now expect total goods exports to rise from an estimated US$2.7bn in 2010 to US$3.6bn in 2011 and US$4bn in 2012 (compared with US$3.4bn and US$3.6bn respectively). Goods imports will also rise strongly in 2011-12, to an average of US$4.9bn (previously forecast at US$4.5bn), from an estimated US$3.7bn in 2010, given the outlook for sustained high oil prices and the demand from large-scale investment projects in minerals and infrastructure. Overall, we now expect the trade deficit to widen from an equivalent of 11.2% of GDP in 2011 to 12.3% of GDP in 2011, before narrowing to 9.7% of GDP in 2012.

The services deficit is expected to drop from US$528 in 2010 (an estimated 6.2% of GDP) to an average of US$530m (5%) in 2011-12 as an increase in service imports for the mining sector is more than offset by a recovery in service exports, led by tourism. The income deficit will rise in nominal terms in line with profit repatriation by foreign firms, but owing to rapid economic growth it will keep broadly steady as a proportion of GDP, at 4.5%. In view of the tensions between Frelimo and the country's donors, aid pledges are set to stagnate in 2011-12, so the transfers balance will rise slowly in dollar terms but will fall as a share of GDP, averaging US$720m or 6.8% of GDP. Overall, the current-account deficit is forecast to widen from an estimated 14.3% in 2010 to 15.7% of GDP in 2011 (12.8% previously), before narrowing to 12% of GDP in 2012 (9.6% previously).

Outlook for 2011-12: Forecast summary

Forecast summary
(% unless otherwise indicated)
 2009a2010b2011c2012c
Real GDP growth6.36.57.37.5
Consumer price inflation (av)3.013.0a7.55.0
Lending interest rate (%)15.716.3a16.517.5
Government balance (% of GDP)-5.6-6.7-6.0-5.0
Exports of goods fob (US$ m)1,8532,7233,6133,966
Imports of goods fob (US$ m)-3,243-3,677-4,797-5,102
Current-account balance (US$ bn)-1,171-1,210-1,501-1,402
Current-account balance (% of GDP)-12.3-14.3-15.7-12.0
External debt (year-end; US$ bn)4.24.95.55.6
Exchange rate MT:US$ (av)27.534.0a32.031.0
Exchange rate MT:¥100 (av)29.438.7a38.938.3
Exchange rate MT:€ (av)38.445.0a43.839.1
Exchange rate MT:SDR (av)42.652.1a50.447.5
a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts.

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The political scene: New veterans' benefits stir up old grudges

On May 18th parliament passed a law granting additional benefits to veterans of the country's anti-colonial liberation struggle, which ended in 1975, as well as to belligerents of the post-independence civil war, which ended with the successful holding of the country's first democratic elections in 1994. Veterans from the ruling Frente de Libertação de Moçambique (Frelimo) party's anti-colonial struggle already enjoyed certain privileges. However, the current legislation also extends assistance-on less generous terms-to combatants on both sides of the 16-year post-independence civil conflict, including those who were in the ranks of the former rebels, Resistência Nacional de Moçambique (Renamo), which is now the country's main opposition party. Veterans of both sides will be entitled to a "re-insertion bonus", provided that they can prove at least three years of service.

Parliamentary debates between Frelimo and Renamo members about the legislation were bitter, as the measure reopened old grievances over events of the civil war. Renamo deputies condemned the legislation as "discriminatory" for granting less generous benefits to combatants in the civil conflict than those offered to veterans of the war for independence. Frelimo officials, for their part, judged that the former group could not be put "on the same pedestal as those who ... dedicated their lives to national liberation struggle". Renamo deputies in turn condemned Frelimo's liberation struggle for resulting in "totalitarianism" and a "one-party state".

Although the passage of this bill has stirred up powerful sentiments, it is a positive step in the ongoing process of national reconciliation. Given Frelimo's dominance of the polity, the fact that it was willing to grant any privileges to its erstwhile enemies is encouraging. Moreover, the strength of feeling about the civil conflict expressed by parliamentarians of both sides is probably not shared by the majority of Mozambicans. According to the World Bank, in 2009 average life expectancy was just 48 years, while nearly half of the population was under the age of 14. Thus, the number of people with memories of the civil conflict has already waned considerably in the 17 years of peace since it ended. These demographic changes are also happening, albeit more slowly, in the two main parties, whose old guard of war veterans is gradually being eclipsed by a younger generation of meritocrats.

The political scene: Constitutional reforms stoke controversy

A Frelimo-dominated parliamentary committee established to overhaul the constitution has led to controversy, owing to a lack of clarity about what changes the ruling party intends to make. Deputies from Renamo boycotted a parliamentary session on May 17th that was to hear from the committee, to which the opposition party has refused to appoint the three members that it is entitled to. In addition to fearing that Frelimo hopes to change the constitution to allow the president, Armando Guebuza, to stand for another mandate, Renamo has objected to the size of the committee's budget, at MT20m (US$650,000), and proposed "study trips" in the region. To date the committee has met just twice.

The governing party has remained tight-lipped about what its exact intentions are as regards its preferred constitutional reform, beyond saying that the constitution needs to be "modernised". Another opposition party, the Movimento Democrático de Moçambique (MDM), has also stated that it is mystified about the aim of the proposed constitutional reforms. However, unlike Renamo, it did appoint the one member of the committee to which it is entitled and has stated that it intends to remain engaged with the process.

Frelimo has denied speculation that it hopes to change the current limit of two presidential terms. Whatever the truth of that claim, Frelimo's supermajority in parliament-which it won at the hotly disputed legislative election in October 2009-would allow it to pass constitutional changes alone, although the party has stated that it hopes to proceed by consensus. The Economist Intelligence Unit currently does not expect Frelimo to tinker with the constitution to let Mr Guebuza stand for re-election, as powerful factions within the party are reportedly strongly opposed to the idea. However, if the committee process indicates that opposition would be surmountable, Mr Guebuza and his loyalists might be tempted to try to push through a change to presidential term limits.

Economic policy: Mega-project contracts may be renegotiated after all

Contrary to previous announcements (February 2011, Economic policy), the government has announced that it may in fact introduce legislation allowing for the renegotiation of contracts for large investment projects in the country-so called mega-projects-to increase their contribution to the economy and public finances. There are only three mega-projects in production so far: the Mozal aluminium smelter, which is operated and part-owned by an Australian-based firm, BHP Billiton; the gas export pipeline operated by a South African company, Sasol; and the Moma titanium mine in Nampula province run by Kenmare Resources of Ireland.

The finance minister, Manuel Chang, made the announcement that the contracts may be revised to parliament amid an increasing number of complaints by local officials and journalists that the mega-projects contribute too little in terms of jobs and tax revenue. Currently, they provide around 4% of total state revenue but account directly for about 10% of GDP, a disparity that makes a prima facie case for increasing the tax burden on the projects.

The first mega-project deals were signed in the late 1990s, when the war-ravaged country had little foreign direct investment stock. To encourage pioneering investors the government offered them more favourable terms than more established investment destinations typically do. Given that foreign investor interest in Mozambique-and particularly its mineral resources-is now booming, it would be unsurprising if new deals were less generous to investors. However, revising existing contracts could prove to be a pyrrhic victory for the government. The long-term damage to its reputation as a reliable partner for foreign investors could outweigh the gains of upping the tax take from current projects, particularly if renegotiations are protracted and acrimonious or have an outcome perceived to be confiscatory. So far the precise terms of the new legislation have not been revealed, but Mr Chang stated that revisions to mega-project deals would happen only with the consent of all parties.

Economic policy: Budgetary support is renewed after the latest aid review

The government has concluded the annual joint review of budget support with its main donors, known as the Programme Aid Partners or the Group of 19 (G-19). The two sides agreed that sufficient progress had been made in the matrix of agreed performance indicators to justify continuing support. Of the 43 targets in the performance framework the government was judged to have met 20 and to have made progress on 15; the remaining eight were judged not to have been met. Following the review the G-19 pledged a total of US$689m in budgetary aid for 2011.

Donors' greatest concerns related to governance, including the fight against corruption. In particular, donors registered their disappointment at the lack of progress made on passing legislation relating to conflicts of interest, the disclosure of assets by senior officials, the legal protection of "whistle-blowers" and the development of a strategic plan to address corruption. However, the G-19 commended the government on its efforts towards improving the country's business environment and joining an international scheme to boost transparency in poor countries' mining sectors, the Extractive Industries Transparency Initiative, as well as the African Peer Review Mechanism, which aims at boosting mutual accountability among African governments.

The recent review also included an assessment of donors' performance, which was, for the first time, undertaken by the government itself, rather than independent consultants as previously. The G-19 was judged to have met eight of 21 targets, with progress made on a further three. Donors were assessed on criteria including timeliness of aid disbursements and the alignment of their strategies with that of the government. The group is also assessed on the number of meetings held with local officials, which can waste government resources. Although the G-19 missed nearly two-thirds of its targets, mainly relating to the manner in which aid was delivered, it was notable that the group honoured its pledges on the amount of aid to be disbursed, despite the economic turmoil in several EU members, including Ireland and Portugal.

Mozambique is one of the most aid-dependent countries in the world, and the annual assessments of the government's and donors' performances are seen as examples of best practice for international assistance. However, the relationship between the local authorities and the country's donors has grown more fraught in recent years. This is partly due to negative donor perceptions about the government's commitment to democratic pluralism. These concerns culminated last year in an unprecedented temporary freeze on disbursements (April 2010, The political scene). Although the dispute was eventually resolved and blocked disbursements made, budgeted aid to the country has broadly stagnated after years of successive increases. Now that donors no longer consider Mozambique to be a post-conflict country, they are set to show less leniency about perceived shortcomings of the government. The local authorities, for their part, no doubt look forward to being less beholden to aid conditions as the country's minerals boom gathers pace. Revenue from this sector could soon come to eclipse the contribution from donors.

Economic policy: Minimum wage increases mostly lag behind inflation

Minimum wages in Mozambique have increased by 8% for workers in the state sector, the country's largest employer, following the conclusion of annual negotiations between the labour federation, the employers' union and the government on April 26th. Wages, which are negotiated annually, are set differently for 11 different economic sectors, including the government, agriculture, fishing, mining and the financial sector. The minimum wage increase for employees in public administration was among the lowest, establishing a minimum of MT2,380 (US$76) a month. By contrast, the minimum wage for agriculture and livestock workers rose by a brisk 19.3% to MT2,005, while the lowest monthly earnings in the financial sector, the best-paid group, rose by a galloping 52% to MT5,320.

Apart from the generous settlement for financial sector workers, the rises in minimum wages are modest in real terms. Indeed, the 8% rise in the minimum wage for government workers lags considerably behind the 13% average rise in consumer prices in 2010. The Economist Intelligence Unit forecasts slower inflation in 2011, averaging 7.5%, which would mean that the settlement for state employees barely represents an increase in their purchasing power this year. Moreover, the wage levels in most sectors remain very low: the minimum for government and agricultural workers amounts to little more than US$2 a day at market rates, or about US$4.50 a day in 2009 purchasing power parity terms.

The importance of minimum wage rates should not be overstated, however. Although precise data are lacking, the majority of Mozambicans are thought either to work in the informal sector or to be unemployed. Therefore, most do not benefit from even the scant income support offered by minimum wage levels.

Economic performance: Production starts at Vale's coal mine in Moatize

A Brazilian firm, Vale, has begun production at its coal mine in Moatize, Tete province, following an official ceremony on May 8th. Vale has developed the mine since 2004 and has already invested around US$2bn of a planned total of US$4bn. The project currently employs about 8,000 people but the payroll is set to soar to 15,000 as the project develops. Coal exports are due to start by July this year. Vale initially plans to produce 1m tonnes of coal in 2011, rising to 6m tonnes in 2012 and 11m tonnes by 2014.

This sharp boost to investment and employment in Tete province has triggered an economic boom, transforming the fortunes of what was previously an isolated and neglected area of the country. The project's impact has been felt further afield too, benefiting subcontractors elsewhere in the country. The next large coal mine to come into production is set to be that at Benga-run by an Australian company, Riversdale Mining-which is also to begin production later this year.

Both Vale and Riversdale are set to export coal on the recently rehabilitated Sena railway line through the Zambezi valley to port facilities at Beira. However, owing to the line's limited capacity, estimated at 5m tonnes a year, this will be a temporary measure. Meanwhile, Vale is investing in another rail link to the deepwater port at Nacala, Nampula province, which is to be completed by 2014. On April 18th Vale signed an agreement with the Malawian and Mozambique authorities to construct a short new rail line from Tete across Malawian territory to link up with the existing Nacala rail line. Vale has extensive experience with mining transport logistics from its iron ore and coal operations in Brazil. It will bring these skills toward building a high capacity bulk minerals export infrastructure for the Nacala corridor project, in which it bought a majority stake last year. These export facilities are eventually to be made available to the other companies mining coal in Tete. Riversdale is also exploring the possibility of using barge traffic on the Zambezi River as its export route.

Global production and consumption of coal
(m tonnes)
 20082009201020112012
Production6,8086,9677,6127,9948,464
Consumption6,6646,8747,3827,8148,245
Balance14493231180219
Sources: Energy Information Administration; Economist Intelligence Unit.

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Data and charts: Annual data and forecast

 2006a2007a2008a2009a2010b2011c2012c
GDP       
Nominal GDP (US$ bn)7.18.09.99.68.59.611.7
Nominal GDP (MT m)180,240207,640239,770263,260288,377306,813362,931
Real GDP growth (%)8.77.36.76.36.57.37.5
Expenditure on GDP (% real change)       
Private consumption4.26.46.30.45.15.06.3
Government consumption8.517.27.518.13.64.24.8
Gross fixed investment6.25.811.351.015.015.012.0
Exports of goods & services12.315.90.52.412.66.77.0
Imports of goods & services1.212.82.814.013.67.78.0
Origin of GDP (% real change)       
Agriculture10.96.67.07.5b8.06.06.8
Industry9.16.68.48.0b9.09.010.0
Services7.96.46.44.8b4.17.06.3
Population and income       
Population (m)21.321.822.322.923.423.924.5
GDP per head (US$ at PPP)7337898428889339951,075
Fiscal indicators (% of GDP)       
Central government budget revenue25.625.225.427.428.531.029.4
Central government budget expenditure26.928.127.932.935.237.034.4
Central government budget balance-1.3-2.9-2.5-5.6-6.7-6.0-5.0
Public debt33.534.132.238.8b47.748.045.6
Prices and financial indicators       
Exchange rate MT:US$ (end-period)26.0023.8025.5029.2032.60a32.2234.22
Exchange rate MT:€ (end-period)34.3134.7635.4541.8544.27a42.3741.75
Consumer prices (end-period; %)9.410.36.22.119.1a3.56.8
Stock of money M1 (% change)18.919.417.537.220.7a10.925.4
Stock of money M2 (% change)23.325.220.332.622.8a22.419.6
Lending interest rate (av; %)18.619.518.315.716.3a16.517.5
Current account (US$ m)       
Trade balance-268-399-990-1,391-954-1,184-1,135
 Goods: exports fob2,3812,4122,6531,8532,7233,6133,966
 Goods: imports fob-2,649-2,811-3,643-3,243-3,677-4,797-5,102
Services balance-372-397-410-450-528-529-530
Income balance-635-592-631-95-382-469-497
Current transfers balance501602852765653680760
Current-account balance-773-785-1,179-1,171-1,210-1,501-1,402
External debt (US$ m)       
Debt stock2,7072,9663,4504,1694,9195,4965,626
Debt service paid38283743606773
 Principal repayments16101415292931
 Interest22192329323842
International reserves (US$ m)       
Total international reserves1,1561,4451,5782,0992,159a2,5272,767
a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts.
Source: IMF, International Financial Statistics.

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Data and charts: Quarterly data

 2009  2010   2011
 2 Qtr3 Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr
Pricesa        
Consumer prices (2000=100)140.0138.1139.1148.9155.9160.9163.2172.4
Consumer prices (% change, year on year)4.01.71.36.711.416.517.315.7
Financial indicators        
Exchange rate MT:US$ (av)27.1327.3329.4030.1734.0036.5035.2031.70
Exchange rate MT:US$ (end-period)26.7028.6029.2031.1035.0036.1032.6030.80
M1 (end-period; MT m)60,79466,28073,90172,92578,70787,92989,19388,302
M1 (% change, year on year)22.431.337.231.629.532.720.721.1
M2 (end-period; MT m)89,15296,430107,075108,338118,474127,994131,467129,332
M2 (% change, year on year)25.830.532.631.632.932.722.819.4
Foreign reserves (US$ m)        
Reserves excl gold (end-period)1,6062,0932,0991,9341,9932,0442,159n/a
a Maputo.
Sources: IMF, International Financial Statistics; UN Food and Agriculture Organisation.

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Data and charts: Monthly data

 JanFebMarAprMayJunJulAugSepOctNovDec
Exchange rate MT:US$ (av)
200925.6026.1027.1027.4027.2026.8026.9027.2027.9029.1029.5029.60
201029.8029.9030.8033.1034.2034.7035.8037.3036.4036.0035.6034.00
201132.7031.6030.80n/an/an/an/an/an/an/an/an/a
Exchange rate MT:US$ (end-period)
200925.8026.7027.7027.5026.8026.7027.1027.8028.6029.8029.7029.20
201030.2030.2031.1034.9033.8035.0036.9037.0036.1035.8035.4032.60
201132.4031.3030.80n/an/an/an/an/an/an/an/an/a
M1 (% change, year on year)
200918.916.720.419.118.522.423.426.731.334.635.637.2
201038.136.131.633.930.329.530.230.132.730.127.320.7
201122.924.821.1n/an/an/an/an/an/an/an/an/a
M2 (% change, year on year)
200922.623.424.324.323.925.825.828.030.533.834.332.6
201034.132.831.635.332.832.935.533.732.729.026.022.8
201122.422.419.4n/an/an/an/an/an/an/an/an/a
Deposit rate (av; %)
200910.310.410.09.89.79.69.59.68.98.89.08.8
20108.38.28.48.78.89.09.610.510.811.011.411.5
201112.9n/an/an/an/an/an/an/an/an/an/an/a
Lending rate (av; %)
200916.316.315.915.915.915.115.114.815.015.215.215.2
201014.414.414.614.615.116.316.416.917.517.918.319.0
201119.3n/an/an/an/an/an/an/an/an/an/an/a
Consumer prices (av; % change, year on year)
20096.54.44.24.74.42.92.31.81.10.81.12.1
20105.16.88.18.811.214.216.316.317.116.216.719.1
201116.516.0n/an/an/an/an/an/an/an/an/an/a
Foreign-exchange reserves excl gold (US$ m)
20091,4931,4931,4681,4791,5301,6061,6931,8742,0932,0662,0152,099
20102,0351,9541,9341,9291,8801,9932,0782,0092,0442,0191,9282,159
20112,1322,143n/an/an/an/an/an/an/an/an/an/a
Sources: IMF, International Financial Statistics; Haver Analytics.

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Data and charts: Annual trends charts

Please see graphic below

Data and charts: Monthly trends charts

Please see graphic below

Data and charts: Comparative economic indicators

Please see graphic below

Basic data

Land area

799,380 sq km

Population

22m (2010, World Gazetteer estimate)

Main towns

Population, 2010 (World Gazetteer)

Maputo (capital): 1,888,144(a)

Nampula: 534,820

Beira: 440,404

Chimoio: 259,211

Nacala: 221,371

Quelimane: 204,705

Tete: 169,967

Pemba: 160,525

(a) Including Matola and Maputo province.

Climate

Tropical and subtropical

Weather in Maputo (altitude 59 metres)

Hottest month, February, 22-31°C (average daily minimum and maximum); coldest month, July, 13-24°C; driest months, July, August, 13 mm average rainfall; wettest month, January, 130 mm average rainfall

Languages

Portuguese (official) and three main African language groups: Makua-Lomwe, Tsonga and Sena-Nyanja

Measures

Metric system

Currency

Metical (MT)

Time

2 hours ahead of GMT

Public holidays

January 1st (New Year's Day), February 3rd (Heroes' Day), April 7th (Women's Day), May 1st (Labour Day), June 25th (Independence Day), September 7th (Victory Day), September 25th (Armed Forces Day), November 10th (Maputo City Day-Maputo only), December 25th (Family Day)

Political structure

Official name

República de Moçambique

Form of state

Unitary republic

Legal system

Based on Portuguese-Roman law and the 1990 constitution, updated in 2004

National legislature

250-member Assembleia da República (parliament) elected by direct, universal suffrage every five years

National elections

October 28th 2009 (legislative and presidential); next national, provincial and presidential elections are due in late 2014

Head of state

President, chosen by direct universal suffrage

National government

The president and his appointed prime minister and Council of Ministers; new cabinet appointed in January 2005; last reshuffle in October 2010

Main political parties

Frente de Libertação de Moçambique (Frelimo) is the ruling party and holds 191 parliamentary seats; the main opposition party is Resistência Nacional de Moçambique (Renamo; 51 seats); the Movimento Democrático de Moçambique (MDM; 8 seats) was formed in March 2009 with the mayor of Beira, Daviz Simango, as its leader; it is drawing strong support from disaffected Renamo members and is bidding to replace Renamo as the main opposition party; another opposition party, Partido Humanitário de Moçambique (Pahumo), was launched by former Renamo members in April 2010

President: Armando Guebuza

Prime minister: Aires Bonifácio Ali

Ministers in the presidency

Parliamentary affairs: Adeleaide Amurane

Social affairs: Feliciano Gundana

Key ministers

Agriculture: José Pacheco

Defence: Filipe Nhussi

Education: Zeferino Martins

Energy: Salvador Namburete

Environmental co-ordination: Alcinda Abreu

Finance: Manuel Chang

Fisheries: Victor Manuel Borges

Foreign affairs & co-operation: Oldemiro Baloi

Health: Alexandre Manguele

Industry & trade: Armando Inroga

Interior: Alberto Mondlane

Justice: Maria Benvinda Levi

Labour: Helena Taipo

Mineral resources: Esperança Bias

Planning & development: Aiuba Cuereneia

Public works & housing: Cadmiel Muthemba

Science & technology: Venâncio Massingue

State administration: Lucas Chomera

Tourism: Fernando Sumbana

Transport & communications: Paulo Zucula

Women's affairs & social welfare: Iolanda Cintura

Central bank governor

Ernesto Gouveia Gove

© 2011 The Economist lntelligence Unit Ltd. All rights reserved
Whilst every effort has been taken to verify the accuracy of this information, The Economist lntelligence Unit Ltd. cannot accept any responsibility or liability for reliance by any person on this information
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