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IMF Approves First Evaluation of Mozambique’s Financial Aid Programme

IMF Approves First Evaluation of Mozambique’s Financial Aid Programme

The International Monetary Fund (IMF) announced the approval of the first evaluation of the financial assistance programme in Mozambique, allowing the disbursement of almost US$64 million in December, subject to final board approval.

“The IMF technical team and the Mozambican authorities have reached agreement on policies that can underpin the board’s approval of the first assessment of the financial assistance programme and lead to the disbursement of about US$63.8 million,” roughly the same in euros.

In the note released yesterday in Washington, the IMF said that “economic recovery continues,” forecasting growth of 3.8 percent this year, but warned of the challenge posed by rising international food and fuel prices.

The IMF approved in May the first financial assistance programme after the hidden debt scandal, paving the way since then for an upward revision of Fitch Ratings and the return of direct budget support from the World Bank.

In the statement released yesterday, which confirms the positive statements made by the head of the IMF mission in Mozambique, Álvaro Piris, on Friday, the IMF technical team recognises the global difficulties, but stresses that the government has reacted well and proactively, as have the measures of the central bank.

“All quantitative and qualitative targets set for the first assessment have been met and good progress has been made on the structural agenda overall; for the future, the macroeconomic environment remains challenging,” the statement read, which concluded: “The authorities want to continue implementing their ambitious reform agenda, including the new law on the sovereign fund, reform of public administration salaries and changes to the public probity law.”

On May 9, Mozambique received the ‘green light’ from the IMF for the first official programme of support to Mozambique (excluding pandemic and cyclones) after the suspension caused in 2016 by the hidden debts scandal, allowing the disbursement of the first tranche of US$91 million (€89.45 million) of the IMF loan of US$470 million (€462 million) until 2025.

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The government estimates that the financing needs for the 2022-2024 programme will be met, expecting $552 million (€553 million) in budget support from other development partners, including $500 million (€501 million) from the World Bank.

At last week’s press conference, Mr Piris ruled out, at least for the time being, the possibility of increasing the amount of financial aid in the light of the increased economic difficulties.

Lusa

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