Tuesday, February 27, 2024

Republic of Mozambique
Ministry of Economy and Finance

Republic of Mozambique
Ministry of Economy and Finance

About PAE

The Economic Acceleration Measures Package

On August 9, 2022, the government of Mozambique announced the launch of the economic acceleration stimulus package

In recent years, the performance of the Mozambican economy has been affected by successive, unprecedented internal and external obstacles, which have been conditioning its growth rate. 

Among these drawbacks was the suspension of foreign support to the State Budget, motivated by undeclared debts. This financial cut took more than eight hundred million dollars a year away in resources, which were instrumental for the country’s ability to make investments. 

Other factors include terrorist violence in Cabo Delgado, which, to this day, has caused the displacement of over 850,000 people in the country. As well as the health crisis caused by the pandemic, and the increase in frequency and intensity of natural disasters, with more than nine cyclones registered in the last four years, a state of affairs that has engendered both material and human loss as well as extensive damage to public and private infrastructure, with direct annual costs exceeding 100 million US dollars. 

All factors combined resulted in the abrupt deceleration of economic growth while adding an immeasurable amount of pressure on the ever-complex challenges which already burden Mozambique’s financial management. Besides, the weakened economic landscape of the country, has emphasized structural economy deficiencies such as chronic budget deficits, historical imbalances in the payments balance, low competitiveness and soaring public debt. 

Consequently, GDP growth has decelerated from an average of 7.3% per year – between 2006 and 2014 – to an average of 2.8% in the last seven years, therefore representing a serious impediment in the Government’s ability to carry out the socio-economic development objectives initially set. 

The conflict in Ukraine, which broke out earlier this year, worsened the global macroeconomic situation, causing inflationary pressures on a global scale with successive increases in the prices of essential goods, particularly food and fuels. 

This situation generated a significant increase in the cost of life for Mozambican families and puts a strain on the prospects for economic evolution in a post-pandemic landscape. 

Mozambique has many competitive advantages to reverse this scenario, and the Government is responsible for making adjustments to its strategy in order to facilitate the revamp of its economy in the face of successive challenges, so that it can honor the commitments made to the people, within the framework of its governance program. It is in this context that the Government intends to proceed with a structured package of reform measures that will place the private sector at the center of the country’s economic transformation and development, in order to promote the diversification of productive activities, enhance opportunities for their expansion, as well as to guarantee the use of the unexplored potential of the country. 

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