IMF priorities in Mozambique accounts are consolidation and transparency – consultant

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IMF priorities in Mozambique accounts are consolidation and transparency – consultant

12:32 CAT | 28 Jul 2017

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The two most important outstanding matters resulting from the IMF’s recent visit to Mozambique are “improved fiscal consolidation and more information on the hidden loans” the chief economist at the Eaglestone consultancy told Lusa yesterday.

“Firstly, the International Monetary Fund once again warns of the need for fiscal consolidation leading to a gradual reduction in public debt and, secondly, it once again calls for more information on the use of funds from loans contracted by Ematum, Proindicus, and Mozambique Asset Management,” Tiago Dionísio told Lusa.

Asked about the main features of the IMF statement released at the end of the visit to Mozambique last week, the economist stressed that “these points are fundamental” and should be seen as “a warning for the State Budget for next year, currently in preparation, to take these issues into account”.

In the statement, the Fund warned that Mozambique urgently needed to consolidate public finances, noting that, despite the improvement of some indicators, the country still faced difficult economic prospects.

It also called on the government to take measures to fill in “gaps in essential information” regarding how the money from the so-called hidden debts was used.

For Dionisio, fiscal consolidation will also serve to “facilitate the process of restructuring the country’s debt”, proposed not only by the IMF but also by the Mozambican government itself, which says that it wants to repay debts to commercial creditors and bond holders.

Regarding information about the destination of the hidden debt money, Dionisio concludes that it is “crucial that steps be taken to improve transparency of public accounts and governance, not only so that it is possible to move forward with a possible package of financial assistance with the Fund but also to improve relations with other international creditors”.

Source: Lusa