IMF notes Mozambique’s economic recovery
Mozambique on road to recovery
The Bretton Woods Institute recently completed its third review of an Extended Credit Facility to the southern African nation
STAFF REPORTER
The International Monetary Fund (IMF) Executive Board completed the Third Review under the Extended Credit Facility (ECF) Arrangement for Mozambique, providing the country with access to Special Drawing Rights 45.44 million, amounting to about US$60.7 million.
The three-year ECF arrangement aims to support Mozambique’s economic recovery and reduce public debt and financing vulnerabilities, while fostering higher and more inclusive growth through structural reforms.
Program performance has been satisfactory. Parliamentary approval of the Sovereign Wealth Fund bill in December 2023 was an important step toward ensuring transparent and sound management of natural resource wealth.
The IMF deputy managing director, Bo Li, said Mozambique’s economic recovery had accelerated, on the back of liquefied natural gas projects.
“The economic recovery is accelerating, supported by the liquefied natural gas (LNG) projects amid modest non-mining growth. At the same time, inflation pressures have declined sharply. While the outlook remains positive, significant risks remain, mainly due to adverse climate events and the fragile security situation,” Li said.
Mozambique was taking tangible steps towards financial discipline, while its fiscal consolidation efforts were noticeable.
“The authorities are undertaking measures to ensure fiscal discipline over the short and medium term. Given Mozambique’s high debt and tight financing conditions, continued fiscal consolidation efforts are warranted. On the revenue side, broadening the Value Added Tax base will help mobilize revenues in an efficient way. On the expenditure side, continued wage bill reform will help create fiscal space for high-priority spending, including social spending,” Li said.
The IMF on 9 May 9 May approved a three-year agreement with Mozambique that will make available US$456 million for the country, of which US$91 million will be available immediately.
The interest rate on the IMF loan will be zero. Repayment of the debt will begin in five and a half years and the full amount should be paid off in 10 years.
The International Monetary Fund (IMF) Executive Board completed the Third Review under the Extended Credit Facility (ECF) Arrangement for Mozambique, providing the country with access to Special Drawing Rights 45.44 million, amounting to about US$60.7 million.
The three-year ECF arrangement aims to support Mozambique’s economic recovery and reduce public debt and financing vulnerabilities, while fostering higher and more inclusive growth through structural reforms.
Program performance has been satisfactory. Parliamentary approval of the Sovereign Wealth Fund bill in December 2023 was an important step toward ensuring transparent and sound management of natural resource wealth.
The IMF deputy managing director, Bo Li, said Mozambique’s economic recovery had accelerated, on the back of liquefied natural gas projects.
“The economic recovery is accelerating, supported by the liquefied natural gas (LNG) projects amid modest non-mining growth. At the same time, inflation pressures have declined sharply. While the outlook remains positive, significant risks remain, mainly due to adverse climate events and the fragile security situation,” Li said.
Mozambique was taking tangible steps towards financial discipline, while its fiscal consolidation efforts were noticeable.
“The authorities are undertaking measures to ensure fiscal discipline over the short and medium term. Given Mozambique’s high debt and tight financing conditions, continued fiscal consolidation efforts are warranted. On the revenue side, broadening the Value Added Tax base will help mobilize revenues in an efficient way. On the expenditure side, continued wage bill reform will help create fiscal space for high-priority spending, including social spending,” Li said.
The IMF on 9 May 9 May approved a three-year agreement with Mozambique that will make available US$456 million for the country, of which US$91 million will be available immediately.
The interest rate on the IMF loan will be zero. Repayment of the debt will begin in five and a half years and the full amount should be paid off in 10 years.
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