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- GDP (PPP):
- $23.9 billion
- 7.1% growth
- 6.9% 5-year compound annual growth
- $1,085 per capita
- Inflation (CPI):
- FDI Inflow:
Mozambique’s economic freedom score is 55, making its economy the 123rd freest in the 2013 Index. Its score is 2.1 points worse than last year, with deteriorations in seven of the 10 economic freedoms including trade freedom, investment freedom, and the control of government spending. Mozambique is ranked 22nd out of 46 countries in the Sub-Saharan Africa region, and its overall score is below the world average.
Mozambique registered the 10th largest decline in economic freedom in the 2013 Index. Despite some progress in previous years, extensive state controls and institutional shortcomings severely undermine development of the private sector, and the country lags in productivity growth and dynamic economic expansion. The foundations of economic freedom are fragile and uneven.
During the second half of 2011, Mozambique resumed exporting its coal for the first time in 20 years. However, structural problems including poor public finance management and underdeveloped legal frameworks undermine private-sector growth. Trade and investment policies are undercut by government interference in the economy. Arbitrary tax policies, marginal enforcement of property rights, and weak rule of law have driven many people and enterprises into the informal sector.
Mozambique held its first democratic elections in 1994 and since then has been promoted as a model for development and post-war recovery. However, when President Armando Guebuza was re-elected in 2009, the elections were widely regarded as corrupt and unfair. In 2012, in an effort to curb corruption, the government passed a law restricting the personal business activities of politicians and public servants. Economic growth has been generally strong since the mid-1990s, but the country remains poor, and the economy is burdened by state-sanctioned monopolies and inefficient public services. Small-scale agriculture, fishing, and forestry employ about 80 percent of the population. The informal sector accounts for most employment. Major exports include aluminum, shrimp, and cash crops. HIV/AIDS is a serious problem.
Property rights are not strongly respected, and law enforcement is inefficient and uneven. The judicial system is not fully independent and remains vulnerable to political influence and corruption. In the absence of an efficient legal framework, court rulings can be arbitrary and inconsistent. Mozambique is one of the world’s most aid-dependent countries, with roughly half of state expenditures funded externally.
The top income and corporate tax rates are 32 percent. Other taxes include a value-added tax (VAT) and an inheritance tax. The overall tax burden is equal to 18.1 percent of total domestic income. Government spending has increased to 34.4 percent of total domestic output, with budget deficits continuing. Expansion of the revenue base remains crucial as external budget support is beginning to diminish.
The regulatory framework has undergone a series of reforms. Launching a business takes less than the world averages of seven procedures and 30 days. Completing licensing requirements, however, takes more than 300 days. A recently passed labor law was intended to make the labor market more flexible, but it also increased overtime restrictions. Inflation has been high, undermining monetary stability.
The trade-weighted average tariff rate is 4.8 percent, and slow customs procedures interfere with the free flow of trade. Despite some progress in enhancing the investment framework, challenges remain. For example, a new “Mega-Projects Law” requires large foreign investment projects to include domestic partners. The financial sector remains hindered by state controls. Most citizens still lack adequate access to financial services.