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COUNTRY REPORT Mozambique Malawi The full publishing schedule for Country Reports is now available on our web site at http://www.eiu.com/schedule. 3rd quarter 1999 The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The EIU delivers its information in four ways: through subscription products ranging from newsletters to annual reference works; through specific research reports, whether for general release or for particular clients; through electronic publishing; and by organising conferences and roundtables. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent St The Economist Building 25/F, Dah Sing Financial Centre London 111 West 57th Street 108 Gloucester Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7830 1000 Tel: (1.212) 554 0600 Tel: (852) 2802 7288 Fax: (44.20) 7499 9767 Fax: (1.212) 586 1181/2 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: http://www.eiu.com Electronic delivery EIU Electronic New York: Lou Celi or Lisa Hennessey Tel: (1.212) 554 0600 Fax: (1.212) 586 0248 London: Jeremy Eagle Tel: (44.20) 7830 1183 Fax: (44.20) 7830 1023 This publication is available on the following electronic and other media: Online databases NewsEdge Corporation (US) Microfilm FT Profile (UK) Tel: (1.718) 229 3000 World Microfilms Publications Tel: (44.20) 7825 8000 (UK) DIALOG (US) CD-ROM Tel: (44.20) 7266 2202 Tel: (1.415) 254 7000 The Dialog Corporation (US) LEXIS-NEXIS (US) SilverPlatter (US) Tel: (1.800) 227 4908 M.A.I.D/Profound (UK) Tel: (44.20) 7930 6900 Copyright © 1999 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author's and the publisher's ability. However, the EIU does not accept responsibility for any loss arising from reliance on it. ISSN 1351-8089 Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Redhouse Press Ltd, Unit 151, Dartford Trade Park, Dartford, Kent DA1 1QB, UK 1 Contents 3 Summary Mozambique 5 Political structure 6 Economic structure 7 Outlook for 1999-2000 10 Review 10 The political scene 13 Economic policy 16 The economy 17 Industry 17 Agriculture 18 Energy 18 Transport and communications 20 Tourism 21 Foreign trade and payments Malawi 23 Political structure 24 Economic structure 25 Outlook for 1999-2000 28 Review 28 The political scene 31 Economic policy and the economy 34 Agriculture 35 Foreign aid, trade and payments 37 Quarterly indicators and trade data List of tables 9 Mozambique: forecast summary 14 Mozambique: IMF, selected economic indicators 19 Mozambique: port traffic 20 Mozambique: rail traffic 21 Mozambique: external debt 27 Malawi: forecast summary 28 Malawi: presidential election results, Jun 15th 1999 29 Malawi: legislative election results, Jun 15th 1999 EIU Country Report 3rd quarter 1999 © The Economist Intelligence Unit Limited 1999 2 32 Malawi: trends in the Treasury-bill market, 1999 33 Malawi: listed companies on the MSE, end-May 1999 34 Malawi: tobacco prices 35 Malawi: trade balance with Zimbabwe 36 Malawi: external debt 37 Mozambique: quarterly indicators of economic activity 38 Malawi: quarterly indicators of economic activity 39 Mozambique: foreign trade 40 Malawi: foreign trade List of figures 9 Mozambique: gross domestic product 14 Mozambique: exchange rates 15 Mozambique: minimum monthly salary 16 Mozambique: consumer prices 27 Malawi: gross domestic product 27 Malawi: kwacha real exchange rates 34 Malawi: tobacco production by leaf type, 1998 EIU Country Report 3rd quarter 1999 © The Economist Intelligence Unit Limited 1999 3 June 28th 1999 Summary 3rd quarter 1999 Mozambique Outlook for 1999-2000: Tensions will mount between the ruling Frelimo and the main opposition party, Renamo, amid uncertainty about the precise date of the national elections, due by the end of 1999. Frelimo will increasingly focus on formulating its electoral strategy, with the president and leader of the party, Joaquim Alberto Chissano, emphasising Frelimo’s crucial role in Mozambique’s economic recovery since the end of the civil war. Meanwhile, Renamo’s electoral strategy will remain dishevelled and unconvincing, which, as polling day approaches, will force the party to rely on familiar tactics of disruption and obstreperousness. Renamo will try to squeeze as much political capital as possible from the fact that Frelimo is struggling to organise the elections within the tight timetable. The outlook for the economy remains bright, with real GDP growth expected to average 11.5% in 1999 and 2000. Inflation is forecast to rise to an average of 4% per year. The current-account deficit will widen more rapidly than previously forecast, from $971m in 1999 to $1.05bn in 2000. Review: It has become increasingly unlikely that Frelimo will manage to organise national elections by December 1999, and the party has been urged to delay the poll. Nevertheless, Frelimo has begun to campaign in earnest, emphasising its economic record and accompanying social improvements. The Renamo leader, Afonso Dhlakama, has decided not to form a coalition with 12 small extra-parliamentary parties. The public debate on constitutional reforms has fallen behind schedule. New legislation has been introduced to curtail employment of expatriates. Espionage charges have been dropped against a South African diplomat, Robert McBride. The IMF has approved a three-year ESAF. Value-added tax was introduced on June 1st, a crucial criterion for reaching the completion point of the World Bank/IMF HIPC initiative. The minimum wage has been increased by 27%. The INE has recalculated Mozambique’s national accounts, resulting in a substantial upward revision to GDP. A deal has been reached between the government and Enron over access to the Pande gasfield. Cotton output is expected to fall in 1999. The telecoms utility is to be part-privatised. Port traffic has declined. The state airline, LAM, has posted a small profit for 1998. A major tourism project has been announced for Vilanculos, Inhambane province. Malawi Outlook for 1999-2000: The opposition MCP-Aford alliance will maintain its conviction that President Bakili Muluzi’s victory in the national election should be annulled on the grounds that the registration process was grossly mismanaged. Although the High Court has ruled in favour of the opposition before, it remains to be seen whether it will be willing to consider the annulment of the election results. Meanwhile, the MCP and Aford will keep the pressure on the ruling UDF in parliament, attempting to lure the support of four independent members who now hold the balance of power. The 1999/2000 (July-June) budget will probably be presented in mid-July, with an EIU Country Report 3rd quarter 1999 © The Economist Intelligence Unit Limited 1999 4 expected budget deficit target of 5.8% of GDP. Real GDP growth is expected to slow slightly from 5% in 1999 to 4.6% in 2000, while average inflation will drop dramatically over the same period, from 45.1% to 13.5%. The current- account deficit will widen from $248m in 1999 to $274m in 2000. Review: Bakili Muluzi has been re-elected as president for another five-year term, although the UDF has failed to secure a parliamentary majority. The MCP-Aford alliance has rejected the election results on a constitutional technicality. The election has served to highlight deep regional cleavages in Malawi. A television station has been launched. The government has managed to keep to fiscal targets in the first three quarters of the 1998/99 fiscal year. The privatisation programme has remained on course, which has helped to preserve relations with international donors. Inflation is still on the rise, with the CPI reaching a year-on-year rate of 56.6% in March. Rumours of another devaluation of the kwacha have been denied. Malawi has signed a preliminary agreement with Mozambique on currency convertibility. Early indications from the 1999 auctions suggest firmer tobacco prices than in 1998. Malawi has criticised Zimbabwe over the terms of the current trade accord between the two countries. The total external debt stock declined from $2.3bn at end-1996 to $2.2bn at end-1997, according to recent World Bank data. Late note: A new cabinet was announced on June 27th 1999. Editors: Noah Beckwith; Todd Moss All queries: Tel: (44.20) 7830 1007 Fax: (44.20) 7830 1023 Next report: Our next Country Report will be published in October EIU Country Report 3rd quarter 1999 © The Economist Intelligence Unit Limited 1999 Mozambique 5 Mozambique Political structure Official name República de Moçambique Form of state Unitary republic Legal system Based on Portuguese/Roman law and the 1990 constitution National legislature 250-member Assembléia da República (parliament) elected by direct, universal, adult suffrage every five years National elections October 1994 (legislative and presidential); next national elections due by December 1999 (legislative and presidential) Head of state President, chosen by direct universal suffrage; currently Joaquim Alberto Chissano National government The president and his appointed prime minister and Council of Ministers; last major cabinet reshuffle 1994 Main political parties Frente de Libertação de Moçambique (Frelimo) is the main and ruling party; the main opposition group is the former rebel Resistência Nacional de Moçambique (Renamo).
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