Mozambique: Bill to create Sovereign Wealth Fund pulled from Parliament agenda

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Mozambique: Bill to create Sovereign Wealth Fund pulled from Parliament agenda

12:10 CAT | 05 Aug 2023

In file CoM

The Mozambican parliament has withdrawn the bill creating a sovereign wealth fund for the country from the debate of the extraordinary session that ends next Monday, several parliamentary sources told Lusa.

“The proposal to create the sovereign fund was withdrawn by the standing committee” of the legislative body, a member of parliament told Lusa, referring details of the decision to formal bodies.

A government source, the entity that submitted the proposal to create the fund to parliament, also said that the document will no longer be debated in the extraordinary session that ends on Monday, after it was included in the list of matters.

It is also out of the question that the instrument will be discussed in the extraordinary session that the standing committee of the Mozambican parliament convened today to take place from 10th to 11th of this month, sources from the Mozambican legislative body added.

This extraordinary session will discuss the revision of laws on preventing and combating money laundering and terrorism, according to the agenda distributed yesterday.

The draft law creating the sovereign wealth fund was on the list of matters for the extraordinary session that started on Thursday and was to be debated today, in first reading, and on Monday, in the committee stage.

The debate on the proposal in parliament has been postponed several times on the grounds that the document needs to be improved.

On Tuesday, the minister of the economy and finance, Max Tonela, said during a parliamentary hearing that the sovereign wealth fund of Mozambique (FSM) should collect US$1bn (€912m) annually within ten years from revenues from natural gas exploration.

“On average, in the 25 years of the concession contract [for natural gas exploration], the Mozambican state will receive US$750 million [€685 million],” explained the minister Max Tonela, questioned in the Mozambican parliament by members of the first committee on constitutional affairs, human rights and legality and the second committee on planning and budget.

In his explanations to MPs, the minister of the economy and finance pointed out that revenues are expected to be around $100 million (€91 million) per year in the first three years and “incrementally”, from the fifth year onwards, around $300 million (€273.6 million) per year”, reaching around $1 billion per year after the first ten years.

An activist from a civil society platform that follows the process of creating the FSM told Lusa that the proposal that the executive took to parliament does not take into account the recommendation that the future account have a system of governance independent of the executive, through an accountability mechanism to parliament, keeping it vulnerable to political pressure.

It also fails to respond to civil society’s request that more than half of the revenues from natural gas exploitation should be channelled to the FSM, not just 40% as stated in the proposal.

The proposal also did not include the suggestion that revenues from the National Hydrocarbons Company (ENH), the state’s business arm in the sector, be deposited in the fund, nor that the account managers be hired through a public tender.

Source: Lusa