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- GDP (PPP):
- $26.3 billion
- 7.5% growth
- 7.0% 5-year compound annual growth
- $1,169 per capita
- Inflation (CPI):
- FDI Inflow:
Mozambique’s economic freedom score is 55.0, making its economy the 128th freest in the 2014 Index. Its overall score is unchanged from last year, with improvements in monetary freedom, business freedom, and trade freedom offset by declines in investment freedom, labor freedom, fiscal freedom, and freedom from corruption. Mozambique is ranked 25th out of 46 countries in the Sub-Saharan Africa region, and its overall score is just above the regional average.
Over the 20-year history of the Index, Mozambique has advanced its economic freedom score by nearly 10 points. Scores have improved in eight of the 10 economic freedoms, with a decline only in the management of public spending. Most notable is a 37-point improvement in monetary freedom. No longer rated economically “repressed,” Mozambique moved into the “mostly unfree” category as of 2000.
Institutional problems continue to limit overall economic freedom and long-term economic development. The judiciary is subject to corruption and political influence. The inefficient regulatory environment, despite some progress in recent years, remains burdensome, and a dynamic labor market has not been fully developed.
Mozambique promotes itself as a model for development. However, when President Armando Guebuza was re-elected in 2009, the elections were widely regarded as corrupt and unfair, and Freedom House has removed Mozambique from its list of electoral democracies. In 2012, 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 economy is burdened by state-sanctioned monopolies and inefficient public services. Small-scale agriculture, fishing, and forestry employ about 80 percent of the workforce, but more than 90 percent of the arable land is still uncultivated. The informal sector accounts for most employment. Major exports include aluminum, shrimp, and cash crops. Significant natural gas reserves are being developed.
Corruption in government and business remains pervasive. Corruption, scarce resources, and poor training undermine judicial independence. The judicial system is further challenged by a lack of qualified judges and a backlog of cases. Without an efficient legal framework, court rulings can be arbitrary and inconsistent. Property rights are not strongly respected, and law enforcement is inefficient and uneven.
The top individual income and corporate tax rates are 32 percent. Other taxes include a value-added tax (VAT) and an inheritance tax. The overall tax burden equals 19.6 percent of gross domestic income. Government spending accounts for 34 percent of GDP. Public debt equals about 47 percent of gross domestic income. Recent discoveries of large natural gas reserves off the coast should bolster public finances.
Considerable efforts have been made to modernize the regulatory framework. The business start-up process is now more straightforward, and no minimum capital is required. Licensing requirements, though still costly, have been eased. The government maintains administered prices for fuels and subsidizes state-owned enterprises such as the electricity company.
Mozambique has a 4.8 percent average tariff rate. The government is involved in several agricultural sectors where trade barriers remain high. There are domestic ownership requirements for some new foreign investment. Dominated by banking, the small financial sector has been evolving, but most people and businesses lack adequate access to financial services. High borrowing costs discourage entrepreneurship.