Report by the WTO Secretariat

The reforms pursued by Mozambique since its first Trade Policy Review in 2001have contributed to high economic growth of 8.7% on average per year during 2001-07, driven mainly by megaprojects financed by foreign direct investment and public spending largely financed by foreign aid. Mozambique remains committed to pursuing prudent fiscal and monetary policies. It has made efforts to reduce its public deficit (after arrears clearance and on cash basis) from 6.17% of GDP in 2001 to 3.9% in 2007, through improved expenditure management and tax administration and collection. Since its 2006 reform, which introduced the New Metical as the national currency, the Bank of Mozambique has maintained a restrictive monetary policy, with “price stability” as the major goal since 2007. Nevertheless, the rising oil and cereal prices on international markets have adversely affected Mozambique’s attempt to keep inflation at around 6-6.5%; the Consumer Price Index (CPI) for the capital city of Maputo recorded an annual rate of increase of 10.26% in December 2007.