The Deputy Managing Director of the International Monetary Fund (IMF), Bo Li, assured on Saturday (17) in Maputo, southern Mozambique, that the institution will move forward in the coming months with a new support programme for Mozambique to support the country’s stability.
‘Our team will work together. In the coming weeks and months, we will discuss a new programme and we are committed to supporting the Mozambican economy to help maintain macroeconomic and financial stability,’ Li said after being received by Mozambican Head of State Daniel Chapo at the Presidency of the Republic.
According to a statement from the Presidency, during the meeting, the director reiterated the IMF’s willingness to continue supporting the Mozambican government’s programmes, ‘highlighting the progress made in governance and structural reforms’: ‘We are impressed by the measures already adopted, in particular the rationalisation of the government apparatus and the vigorous fight against corruption, which are in line with the fund’s principles and expectations,’ the official said, quoted in the document.
The visit by the IMF official represents ‘a sign of the international community’s confidence in the reform efforts of the Mozambican government,’ led since January by Daniel Chapo, ‘and an opportunity to leverage new partnerships for inclusive and sustainable growth,’ the Presidency emphasised.
The IMF and the Mozambican authorities have agreed to end consultations under the current aid plan and start negotiations to design a new one, the international financial institution said in a statement on 18 April.
‘To better align IMF support with the new government’s vision and priorities, the Mozambican authorities have requested the start of discussions for a new IMF programme. Discussions with the teams will begin shortly,’ the statement said.
In the same text, the Washington-based international organisation said that “the Mozambican authorities and IMF teams have agreed not to proceed with subsequent reviews under the Extended Credit Facility (ECF) supported mechanism”.
The agency was in Mozambique between 19 February and 4 March ‘to discuss the implementation of policy measures under the ECF mechanism’ and continued with remote meetings. The programme was approved in May 2022 and provides for total financing of US$456 million to the country, with four tranches already released.
IMF Deputy Director-General alongside President Daniel Chapo
On 15 June 2024, the fund announced a ‘technical agreement’ with the government on economic policies to complete the fourth review of the country’s assistance programme, allowing for the disbursement of an additional $62.4 million (exchange rate at the time). Previously, the third review of this 36-month plan, carried out in January this year, was completed, releasing the third tranche of $60.7 million for budget support. At the time, total disbursements to Mozambique under this ECF amounted to approximately $273 million.
‘Preliminary estimates suggest that there were significant budget slippages in 2024, which are partly explained by the slowdown in economic activity during the last quarter,’ said Pablo Lopez Murphy, who led the IMF team and discussions with the Mozambican authorities, including the Mozambican President and Prime Minister, from 19 February to 4 March, quoted in a statement from the institution on the assessment carried out in recent days on the ECF agreement.
‘Fiscal consolidation in 2025 is necessary to ensure fiscal and debt sustainability and preserve macroeconomic stability,’ Murphy added, alluding to the policies underpinning the fifth and sixth reviews under the ECF.
Source: Lusa
