Mozambique's economy hasexperienced strong and sustained growth since the end of thecountry s civil war in 1992. Over time, the sources ofrevenues are changing, bringing both opportunities andchallenges for fiscal management. The government hasloosened fiscal policy in the past few years, and thecurrent fiscal stance does not appear sustainable. Publicspending is projected at almost 42 percent of gross domesticproduct (GDP) in 2014, and the deficit after grants isexpected to widen to over 9 percent of GDP. These fiscalconsolidation efforts will require reprioritizingexpenditures and increasing the efficiency of spending, toensure sufficient resources are allocated to prioritysectors. Looking ahead, substantial resource revenuesexpected toward the end of the decade present anunprecedented opportunity but this will need to be wellmanaged. The 2001 and 2003 public expenditure reviewsindicated that a number of financial management reforms arerequired, which the government successfully implemented.However, it is important to build on this progress to ensurethat the government is sufficiently prepared to address thechallenges ahead. Given external economic shocks and thepossibility of weaker commodity prices, resource revenuescan be delayed or reduced. Therefore, it will be importantto adopt a prudent fiscal stance in the medium term toadequately prepare for the changes ahead.
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