MAPUTO, Stressing that a resumption of high levels of economic growth will require reforms, fiscal discipline and selfless work from all Mozambicans, the Governor of the Bank of Mozambique, Rogerio Zandamela, has disclosed that the country’s growth in the first nine months of this year amounted only to 3.0 per cent, considerably lower than the government’s estimate of 5.5 per cent.

In his annual end-of-year address on the economic situation here Monday, Zandamela said: Despite the efforts made in tax collection, State revenue remains below what is needed to finance expenditure.”

He had no doubt that this was primarily the result of the suspension of financial aid by donor countries which had traditionally provided direct support to the Mozambican State budget.

The suspension began in April 2016, following the discovery of the true state of Mozambique’s foreign debt. Three loans for more than two billion US dollars, taken out by quasi-public, security-related companies from Credit Suisse and VTB of Russia, and guaranteed illicitly by the previous government headed by President Armando Guebuza, added 20 per cent to the country’s foreign debt, and pushed it beyond the limits of sustainability.

A basic condition for the resumption of normal relations with the donor community was an independent audit of the three companies. However, this audit, undertaken by the international accounting firm Kroll, was sabotaged by the management of the three companies which refused to release key information, citing easons of national security.

Zandamela promised that monetary policy in 2018 will be aimed at a low and controlled inflation rate, of less than 10 per cent. If this was successful, he hoped that the private sector of the economy will be the main beneficiary of the few financial resources our system has.

He stressed the successes achieved by a tight monetary policy in 2017. He believed the measures taken by the Bank of Mozambique, including a dramatic hike in its benchmark interest rates, had played a major role in restoring macro-economic stability.

Annual inflation, which hit about 27 per cent in November 2016, eased this year to only 7.15 per cent from January to November. The exchange rate of the national currency, the metical, has also stabilised. By November 2016, the rate had soared to around 80 meticais to the US dollars, but a year later it had fallen back to 60 meticals to the dollar.

Zandamela revealed that capital gains tax of 352 million dollars has entered the country, raising the country’s foreign reserves to more than three billion dollars, enough to cover imports of goods and non-factor services (excluding the imports of the foreign investment mega-projects) for seven months. At the end of 2016, the reserves had covered less than three months worth of imports.

The capital gains tax mentioned by the Governor was paid by the Italian energy company ENI, on completing the sale of half its equity stake in the natural-gas rich Area Four of the Rovuma Basin, off the coast of the northern province of Cabo Delgado, to the American oil and gas giant ExxonMobil.