Government stresses civil society involvement in bill on Sovereign Wealth Fund – AIM

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Government stresses civil society involvement in bill on Sovereign Wealth Fund – AIM

8:23 CAT | 27 Jun 2022

Photo: O País

The Mozambican government has stressed its commitment to the involvement of all parts of society in analysing the bill to set up the country’s Sovereign Wealth Fund, in order to draw up the best model for the benefit of the country, according to a spokesperson for the Ministry of Economy and Finance, Ângelo Ferreira.

Speaking on Wednesday, at an event in Maputo organized by the Civic Movement on the Sovereign Wealth Fund (MCFS), Ferreira said the bill will be shared with all parties and later submitted for consideration to the Mozambican Parliament, the Assembly of the Republic.

“The government will continue to give importance to the involvement of all segments of society in this process, in an inclusive way, in order to obtain the best possible results in terms of a model for Mozambique”, he explained.

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According to Ferreira, with the discovery of huge natural gas deposits in the Rovuma Basin, in the north of the country, a growth in state revenues is expected, which will improve the fiscal balance and human development indices.

To avoid abuse of increasing wealth, institutions must be created to control and distribute the wealth from natural resources, he added.

Mechanisms for the distribution of wealth are needed, said Ferreira, in order to avoid mismanagement of resources, and a lack of diversification of the economy based on concentration on the exploitation of raw materials, that is, an economy that reinforces poverty and violence.

The Bank of Mozambique, said Ferreira, has a mandate to conduct the process of drafting a concept note that will serve as the basis for the whole process of listening to and collecting contributions on the Sovereign Wealth Fund, from the various segments of society.

“This process will culminate in the proposal of the model to be adopted in Mozambique, how to ensure the best model of governance and transparency for the country, and how to ensure that all Mozambicans enjoy the benefits resulting from the exploitation of natural resources”, he said.

Ferreira also revealed that delegations from the Bank of Mozambique have visited a range of countries to find out how the sovereign wealth funds function. It visited sovereign wealth funds of Alaska in the United States of America, Trinidad and Tobago, East Timor, Botswana, Angola and Norges Bank of Norway.

The creation of the Sovereign Fund, Ferreira stressed, aims to define deposit and withdrawal rules ensuring that the allocations to the State Budget are relatively stable over time, and to prevent price volatility in the international commodities market from being transmitted to the national economy.

“It also aims to promote investments in assets in Mozambique and abroad, to form public savings, to foster projects of strategic interest to the country, and to mitigate the effects of economic cycles”, he stated.

Source: AIM