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Economy

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Independent Mozambique inherited a colonial economic structure characterised by asymmetries between the North and the South of the country and between the country side and the city.  The south is more developed than the north and the city is more developed than the country side. Absence of an integrated economy and extreme oppression of manpower were the most dominant characteristics of such an asymmetry.

The development strategy designed to alter this asymmetry was the adoption of a socialist economy planned at the central level. However, the unfavourable regional and international state of affairs, the natural disasters and the 16 year domestic military conflict have made the strategy impractical. The foreign debt (about 5.5 billion dollars in 1995) has forced the country to operate a radical change for a strategy of market development and join the Bretton Woods institutions and the consequent adoption of a Structural Adjustment Programme from 1987. Since then, the country has been experiencing a remarkable economic growth. The Gross Domestic Product (GDP) has been growing at an average of above 7-8% per annum and sometimes reaching two digits levels. Inflation is below 10%. The trend is to keep it at one digit. In monetary terms, Mozambique possesses one of the most liberal money exchange regimes in Africa. The international commercial partners have enough reasons to greatly rely on the country for the capability that the monetary authorities have been managing in keeping adequate volumes of payment means over foreign countries. The external reserves from the Central Bank have been fixed at over six months of services and goods importation.

The State, through the execution of its budgetary policy, regulates and foster the most important socio-economic fields and creates a good business environment which is highly favourable for private initiative development.  The legal reforms in the scope of financial, fiscal, labour, commercial and land legislation undertaken by the government have significantly contributed in strengthening such a good environment with the respective attraction of domestic and foreign private investment. 

The country economic potential for attracting investment in agro-industry, agriculture, tourism, fishing and mining is enormous. Projects such as Mozal, the Cahora Bassa Dam, Railway and Port Corridors and Tourism Facilities throughout the country have been contributing significantly in placing Mozambique in the route of major regional and international investments.

Despite remarkable economic growth the country has been experiencing, a number of Mozambicans still live below the poverty line. The fight against severe poverty is one of the main government priorities for the five-year period 2005-2009.   For this purpose, a second phase of the Action Plan for Poverty Reduction (PARPA II) was designed.

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