Mozambique:First Review under the Three-Year Arrangement under the Extended Credit Facility, and Request for Modification of the Monetary Policy Consultation Clause, and Financing Assurances Review-Press Release; Staff Report; and Statement by the Exe

The economic recovery is strengthening, as a successful vaccination campaign and recovery from COVID-related restrictions dominate headwinds from the worsening international economic environment. Growth is projected at 3.8 percent this year, rising to 5 percent in 2023 as the first liquefied natural gas (LNG) project enters production. Food and fuel prices have pushed inflation to double digits. Monetary policy has been proactive, including a further 200bps increase in the policy rate in September 2022. Credit conditions remain tight, while financial sector buffers built before the pandemic have underpinned banking sector resilience. Fiscal outcomes have been in line with expectations. The current account deficit is lower than forecast (though it still widens due to LNG infrastructure imports), as exports have been stronger than anticipated. International reserves have declined faster than anticipated due to higher imported fuel prices.