Covid-19: Mozambican civil society criticises IMF strategies

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Covid-19: Mozambican civil society criticises IMF strategies

2:28 CAT | 23 Jun 2020

File photo: DW

The Budget Monitoring Forum (FMO) calls for more oversight and says that the IMF’s strategies for transparency in the management of funds made available in the context of the pandemic are insufficient.

The FMO said on Monday (22.06) that there was no guarantee that the Mozambican government will transparently manage the US$309 million in support made available by the International Monetary Fund (IMF) in view of the budget deficit caused by the Covid-19 pandemic, and that the involvement of civil society in monitoring was vital.

In a note distributed to the media, the platform, which brings together various Mozambican civil society organisations, says that the IMF has supported programmes for “economic governance” in Africa for almost 40 years, but successive corruption and other scandals, which keeps the continent in an underdeveloped stage, continue to surface.

“Some of the IMF’s actions and decisions go against its intention to promote good economic governance practices, as happened when it turned a blind eye to blatant acts of poor macroeconomic governance during the controversy over the re-evaluation of the sustainability of the Mozambican public debt,” the institution’s note reads.

Accountability mechanisms

The platform met the IMF in May to discuss accountability mechanisms pertaining to the Mozambican government’s management of the loan, following a letter sent by civil society to the international body, warning of the need to reinforce transparency in loan management.

The IMF clarified at the meeting that the agreement with the Mozambican government for includes the publication of major public contracts and the auditing of the expenses incurred and their respective publication, stating that the rest of the process is the responsibility of the executive.

The FMO says the IMF’s requirements are not enough, as the participation of civil society could “limit the scope of action of public managers with intentions to divert funds from the public treasury for purposes outside the agenda of rescue of economies affected by the pandemic crisis”.

Loan

The IMF loan represents about half of the US$700 million (€623 million) financial support that Mozambique expects to receive from partners in the fight against the pandemic caused by the new coronavirus.

Support was requested from partners by the government in Maputo in March to cover the fiscal hole left by the pandemic in the 2020 state budget, as well as to finance the fight against the disease and provide support for the most vulnerable.

IMF support will be provided through the rapid credit facility (RCF) and US$28 million (about €25 million) in disaster relief and containment funding.

At the time of the announcement, the IMF clarified that “RCF resources will be due only after LNG production, exports and fiscal revenue are expected to start”, which is expected for 2022/2023.

The IMF takes into account the government’s promises to publish audits on the use of funds and relies on the Bank of Mozambique’s progress in improving management and audit capacities, according to recommendations made by a mission in December 2019.

The commitments contrast with Mozambique’s recent past, which is overshadowed by the state’s so-called €2 billion “hidden debts”, which led the IMF and donors to cut direct support to the State Budget in 2016.

This is the second consecutive year in which Mozambique has received support from the IMF’s RCF. In 2019, the International Monetary Fund lent the country US$118 million (€105 million) after Cyclones Idai and Kenneth in support of humanitarian and reconstruction efforts.

Source: Deutsche Welle