IMF mission to analyse Mozambique’s financial health in December

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IMF mission to analyse Mozambique’s financial health in December

3:07 CAT | 15 Nov 2016

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An International Monetary Fund (IMF) technical mission will be in Maputo between 1 and 14 December to analyse the health of the Mozambican financial system, the Bank of Mozambique has reported.

According to the Lusa news agency, the IMF’s Monetary and Capital Markets mission takes place after the central bank intervened in two banks and in parallel with the negotiations with the government for the resumption of aid from the Fund, suspended since May following the hidden debt scandal.

According to the Bank of Mozambique, quoted by the Lusa agency, the mission is a technical mission to “provide support to the Mozambican authorities in analysing the health of the financial system and implementation measures to strengthen financial stability and banking supervision”.

The central bank is also applying fiscal and monetary adjustment measures advocated by the IMF to contain strong metical devaluation and rising inflation.

The IMF halted funding to Mozambique in May as a result of the revelation of large debts by state-owned companies guaranteed by the previous government and hidden from public accounts.

The institution led by Christine Lagarde is in negotiations with the government for the resumption of support, which according to its representative in Maputo, must include a new program to be agreed by the end of the first half of 2017.

According to the same source, to resume support, the IMF requires an independent international audit of the debts of state-owned enterprises, already announced by the Mozambican authorities, as well as macroeconomic adjustment measures and debt set on a sustainable trajectory.

The deputy director of the IMF’s African Department, David Owen, and the IMF representative in Maputo, Ari Aisen, had a meeting yesterday with the prime minister, Carlos Agostinho do Rosário.

On 25 October, the government acknowledged its inability to pay forthcoming instalments of its obligations to creditors, proposing a restructuring of payments and renewed financial assistance from the IMF.

According to IMF rules, financial aid can not be given to a country in debt distress as measured by five indicators, on all of which Mozambique fails to qualify.

The resumption of support to the state budget from a further group of 14 countries and institutions is also dependent on agreement between the IMF and the Mozambican government being reached.

Source: Folha de Maputo