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Economic situation Problems despite great potential
The country's economic crisis deepened when it emerged in 2016 that Mozambique's government had, in contravention of the constitution, issued government guarantees to back loans totalling 1.4 billion US dollars taken out by state-owned companies between 2012 and 2014 . This sparked a crisis of confidence. International donors cut off their budget support to the government and the International Monetary Fund (IMF) suspended its aid programme. This leaves the current government with very little financial scope. The indications are, however, that the macroeconomic situation will improve in 2018 and 2019.
With extensive coal fields and massive gas deposits, Mozambique has enormous economic potential. It also has other natural resources, such as titanium, tantalum, graphite, rare earths, gold, diamonds and uranium, and is well placed to harness hydropower. Mozambique has large areas of arable land with good soil. It therefore has the potential to considerably increase its agricultural production. The country's position means it is well-placed to offer transport corridors for its landlocked neighbours.
However, the investment climate is poor. Mozambique offers little legal certainty and there is a lack of infrastructure, a reliable energy supply and a well-trained workforce.
The government's current programme of work focuses on increasing the productivity and competitiveness of the economy, particularly the agricultural sector, and improving the general conditions required for doing so. It plans to expand infrastructure, improve access to energy, better train the workforce and cut red tape.