afrol News, 26 July - Following a visit by a high ranking official of the International Monetary Fund (IMF) to Mozambique, the Fund urges the Maputo government to "press ahead with a second wave of structural reforms." While Mozambique had experienced "impressive progress in recent years," only new reforms could consolidate this progress.

Takatoshi Kato, the IMF's Deputy Managing Director today spoke to the press in Maputo after his fist visit to Mozambique. The high ranking official made it clear that the country needed to prepare for yet another round of painful reforms aimed at liberalising its economy.

Mr Kato during his stay in Mozambique had met with President Armando Guebuza, Prime Minister Luisa Diogo, Minister of Finance Manuel Chang, Minister of Planning and Development Aiuba Cuereneia, Central Bank Governor Adriano Maleiane and other members of the government. He also met with donor agencies, civil society groups and visited a medical research centre in the District of Manhiça.

The IMF official congratulated Mozambique on its "impressive progress in recent years." Real GDP growth over the past decade had averaged 8 percent - well above its regional peers - and the external position has improved further, against the backdrop of declining inflation, Mr Kato pointed out.

He attributed this economic success to "sound macroeconomic policies and structural reforms," carried out under successive IMF programmes and with substantial donor assistance. "The progress we have seen is welcome," Mr Kato noted.

However, the still very poor country was "at a important juncture in its development, and several important challenges remain to be addressed," he told the press in Maputo. There was "a need to press ahead with a second wave of structural reforms - by strengthening institutions and removing impediments to private economic activity - to sustain a high and broad-based growth and achieve substantial and lasting reductions in poverty."

The IMF thus holds that Mozambique needs to go through another round of painful reforms. In discussions with the presidency and other Mozambican politicians, Mr Kato had tried to assure support for new tax reforms, aimed at increasing taxes and improving tax collection to increase government revenue. He recommended raising taxes, strengthening tax administration, eliminating tax exemptions and improving compliance.

Other recommended structural reforms included "adopting more flexible labour regulations, improving governance through creation of an accountable judicial system and a transparent regulatory framework, and improving basic infrastructure especially in the agricultural sector," according to Mr Kato. At this stage, no mention of further privatisations was made.

According to the IMF official, his suggestions had been well received by the Mozambican government, which is totally dependent on the Fund's goodwill. President Guebuza and several Ministers had underscored "their determination to respond to the challenges they face," Mr Kato said. If the government followed up, the IMF was "committed to working with Mozambique," he added.

By staff writer

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