This Diagnostic Report on Transparency, Governance and Corruption for the Republic of Mozambique highlights that the economy is at a turning point, and efforts to address governance and corruption vulnerabilities can have a lasting positive impact. The current levels of public debt have caused us to take a hard look at our governance and anticorruption framework and have prompted various reforms to address the vulnerabilities exposed in this framework. The governance and anticorruption framework is not consistently or comprehensively enforced. The rule of law is undermined by the insufficient implementation of existing legislation and regulations, including, in some cases through the absence of necessary regulations and explanatory guidelines. Civil society, the private sector, and the development partners in Mozambique also have critical roles to play. In addition, issues related to poor governance and corruption cannot be effectively addressed unless similar attention is paid to their transnational aspects, which need to be handled at a regional and global level, in multilateral and other international fora.
Mozambique’s economy is at a turning point, and efforts to address governance and
corruption vulnerabilities can have a lasting positive impact. The current levels of public
debt have caused us to take a hard look at our governance and anti-corruption framework and
have prompted various reforms to address the vulnerabilities exposed in this framework. In
general, the problems in our society, and specifically corruption, have been examined in
detail recently and are clearly macro-critical.2 One study estimated the costs of corruption to
Mozambique during the period 2002 to 2014 at up to USD 4.9 billion (approximately 30
percent of the 2014 GDP).3 The impact of these costs is widespread, affecting taxpayers,
public service providers, the financial and private sector, as well as Mozambique’s
international reputation.4 These costs are especially harmful at a time when our country has
been hit by a series of shocks, notably the fall in commodity prices, drought, the withdrawal
of donor budget support, and, more recently, Tropical Cyclones Idai and Kenneth. At the
same time, Mozambique stands poised to reap significant revenues from natural resource
reserves, and our duty as the government is to ensure the responsible stewardship of those
funds for both current and future generations. By taking meaningful steps now to implement
the governance and anti-corruption framework in an evenhanded, consistent, and effective
manner, and to support efforts toward transparency and individual and institutional
accountability, as the government, we can aim to achieve enduring results.
The Mozambican economy recorded a strong performance in 2011, showing little sign of being affected by the global turmoil. Given the declining trend in foreign aid in the medium term, the government is tapping more into nonconcessional borrowing to close the infrastructure gap. To promote inclusive growth, the government has launched a series of initiatives to implement the Poverty Reduction Strategy including an overhaul of social protection programs. Reform momentum needs to be maintained, as implementation challenges are enormous and administrative capacity and coordination need to be upgraded.
The staff report for the 2013 Article IV Consultation for the Republic of Mozambique focuses on the development agenda and appropriate policy priorities to successfully transition to a resource-rich era. These priorities include skillful medium-term management of the impact of developing coal and gas resources, high public investment spending on growth, external competitiveness, and through increased commercial borrowing, on debt sustainability and investment planning. Mozambique has a high rate of public investment of which more than half is financed domestically. The authorities are working to strengthen their project selection and economic profitability analysis capacity, and to assess the impact of related borrowing on public debt.