The International Monetary Fund (IMF) announced on Thursday, April 16, that Mozambique is not ready for a new financing program given the country’s challenges, and that macroeconomic analyses are underway to find solutions.
“There are no conditions other than the need to take urgent measures to address today’s challenges. We continue to discuss the matter to identify a set of specific details for a program,” said the IMF’s resident representative in Mozambique, Olamide Harrison.
The Ministry of Finance confirmed on April 2 that it had made a “full and early repayment” of $701.4 million to the International Monetary Fund, settling loans contracted under the Poverty Reduction and Growth Trust (PRGT).
Meanwhile, speaking at a seminar on “The Macroeconomics of Defense Spending, Conflicts, and Recovery,” Olamide Harrison said that the IMF does not require advance payments in order to negotiate. “I think the motivation is rational; it is up to the Mozambican authorities to respond,” he explained.
“We will analyze the challenges and imbalances on the domestic front, but also in the external environment, to try to find a solution regarding the measures needed to restore macroeconomic balance,” added the resident representative.
This week, the National Director of Fiscal and Financial Analysis, Alfredo Mutombene, stated that the country will seek to negotiate a new support program with the IMF during the IMF and World Bank Spring Meetings taking place this week in Washington, D.C., in the United States (U.S.).
The Mozambican delegation participating in these meetings is led by Finance Minister Carla Loveira and plans to hold technical meetings with officials from the two financial institutions to discuss new forms of economic cooperation.
Recently, Carla Loveira revealed that the government drew on international liquid reserves to pay its debt to the International Monetary Fund, assuring that the decision does not compromise state institutions.
“We paid the debt service to the IMF by drawing on the country’s international liquid reserves. These are financial positions that Mozambique holds, so there was no need to make any budgetary adjustments for this purpose,” the minister stated, as quoted by Lusa.
The Confederation of Economic Associations (CTA) stated that the settlement of the country’s debt to the International Monetary Fund is a “significant signal” of macroeconomic responsibility and the strengthening of international credibility, while also calling for attention to “substantial domestic debts.”
