The boost in coal production from the first mega coal mining projects that came online this year, coupled with strong performance in the financial services sector, transport and communications, and construction, helped to push GDP real growth rate to 7.2% in 2011. The country has achieved an impressive average of 7.2% growth during the last decade. The continuation of high foreign direct investment (FDI) inflows, mostly in extractive industries, together with strong agricultural growth and infrastructure investment will drive growth to 7.5% and 7.9% in 2012 and 2013. Despite the strong growth, the Central Bank’s consistent tight monetary policy, supported by a prudent fiscal policy, reduced the end of year inflation from 12.7% to 10.8% in 2011. Prospects of a further decrease in inflation to 7.2% in 2012 and stabilisation at 5.6% in 2013, will allow a monetary policy easing in 2012, targeting credit expansion. The roll-out of pro-poor measures prepared during 2011, coupled with an ambitious infrastructure investment programme should widen the fiscal deficit from -3.3% in 2011 to -6.8 and -7.4% in 2012 and 2013. Mozambique’s main medium-term economic structural challenge is the broadening of its fiscal base. Aid flows are expected to decrease continually from 51.4% of budget in 2010 to 39.6% in 2012. The diversification of the revenue base, in particular through enhanced extractive sector taxation, is paramount to sustain and promote an inclusive growth agenda.