Mozambique needs second wave of reforms

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Page 309

Thanks largely to a strong commitment to sound macroeconomic policies, continued progress with structural reforms, and a stable political situation, Mozambique's economic performance has improved markedly in recent years, supported by substantial donor assistance. Over the past decade, real GDP grew 8 percent a year on average-the fastest growth in a non-oil-producing African country-and year-end 12-month inflation fell to single digits, while international reserves strengthened considerably, according to the IMF's recent economic review. The share of the population living in absolute poverty also declined significantly.

The economic expansion continued to be broad based in 2004, with growth of 7.2 percent, down just over half a percentage point from the previous year. Lower food prices and an easing of inflation expectations helped keep inflation on a downward trend, despite sharp increases in oil...