December 18, 2017 / 7:20 PM / a year ago

Mozambique's economy needs reforms, fiscal discipline to grow - central bank governor

MAPUTO, Dec 18 (Reuters) - Mozambique needs reforms and fiscal discipline for it to return to levels of economic growth seen before its crippling 2016 debt crisis, central bank governor Rogério Zandamela said on Monday.

Mozambique’s economic growth is projected at 4.7 percent this year compared with 3.3 percent in 2016. In the eight years before 2016, economic growth had averaged 7 percent.

“Raising economic activity to the average growth rates we have been recording will continue to demand reforms, fiscal discipline and selfless work,” Zandamela said.

Zandamela said that despite the efforts made in the collection of taxes, government revenues continued to fall short of what was needed to finance expenses due to the suspension of direct budgetary support by donors.

The International Monetary Fund cancelled its funding to Mozambique last year after the emergence of more than $2 billion in loans that were not approved by parliament or disclosed publicly.

An audit showed in June that roughly a quarter of the money remained unaccounted for.

Consumer prices in the southern African country rose to over 20 percent in 2016 after the debt crisis but has since eased to 7.15 percent thanks largely to a recovery in the metical currency, reducing the cost of imports.

“For the coming year, monetary policy will be geared towards keeping inflation low and controlled at the single-digit level,” Zandamela said. (Reporting by Manuel Mucari; Editing by Olivia Kumwenda-Mtambo; Editing by Alison Williams)

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