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Government Expects Mozambique’s Sovereign Wealth Fund to Be Operational By April

Government Expects Mozambique’s Sovereign Wealth Fund to Be Operational By April

The government revealed on Tuesday (12) that Mozambique’s Sovereign Fund, which will be financed with revenues from gas exploration projects, will be operational from April.

“Our expectation is that all the work on creating instruments to ensure the viability of the fund will be completed by the end of this month, so that by early April it will be up and running,” said the Deputy Minister of Economy and Finance, Amílcar Paia Tivane.

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Speaking after another session of the Council of Ministers, where the Executive approved the decree regulating the Sovereign Wealth Fund Law, he explained that guidelines will be established for good governance, emphasising that the fund’s decision-making structure will initially be made up of the Assembly of the Republic, the Government and the Bank of Mozambique.

“The regulation also defines the procedures for ensuring the transfer of resources associated with the exploitation of liquefied natural gas (LNG), and also revenues from the exploitation of future projects in the oil and gas area, setting the proportion at 60 per cent for the State Budget (OE) and 40 per cent for the Sovereign Fund account, this for the first 15 years, and from the 16th onwards, the division will be 50 per cent for each,” he said.

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Tivane also pointed out that the regulation “typifies the circumstances in which the transfer from the fund’s account to the State Budget is authorised”, specifically “in the event of a public calamity and also in situations in which a State of Siege is declared for any reason”.

On 8 January 2024, the President of the Republic, Filipe Nyusi, promulgated the law creating the FSM, which was approved by Parliament on 15 December 2023.

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The proposal to create the Mozambique Sovereign Fund, presented by the government, received 165 votes in favour only from the Mozambique Liberation Front (Frelimo), while 39 opposition MPs [Resistência Nacional Moçambicana (Renamo) and the Movimento Democrático de Moçambique (MDM)] voted against.

“Projections indicate that annual gas exports could amount to a nominal 91.7 billion dollars over the life cycle of the project, in a scenario in which all the development initiatives approved so far by the government are in operation. In this scenario, annual revenues for the state will peak in the 2040s at more than 6 billion dollars a year,” explained the Minister of Economy and Finance, Max Tonela, at the time.

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