IMF wants to expand cooperation with Mozambique for economic stabilization

Login

Register

http://www.clubofmozambique.com/

IMF wants to expand cooperation with Mozambique for economic stabilization

11:09 CAT | 21 Feb 2025

File photo: Steffani Reynolds/AFP

The International Monetary Fund (IMF) expressed yesterday its willingness to expand cooperation with Mozambique, promising to work with the new executive to find the “best way” to contribute to the economic stabilization of the African country.

“A new government has taken power and we are here to understand the priorities of this government, to contribute to economic stability. We are convinced that Mozambique has enormous potential and so we want to work alongside the government in the face of some of the challenges that this executive has,” said Pablo Lopez Murphy, head of the IMF delegation, who met the Mozambican head of state, Daniel Chapo, today.

According to Murphy, the Mozambican executive has an “ambitious agenda” to face the challenges the country is facing, with emphasis on economic development, job creation and
the fight against poverty.

“We want to see how we can contribute and support the government in this process. Our idea is to continue supporting Mozambique and we will work alongside the government to see what is the best possible way to contribute. We are here to take on this role,” he added.

In July 2024, the IMF announced the immediate disbursement of more than US$60 million (€55.5 million) in support to Mozambique, under the country assistance program.

In a statement released at the time, the IMF said that the executive board concluded the regular consultation process with Mozambique for 2024 and the fourth review of the 36- month Extended Credit Facility (ECF) agreement, which “allows for an immediate disbursement” equivalent to US$60.03 million “usable for budget support”, bringing total disbursements to Mozambique under this assistance program to US$330.14 million (€304.9 million).

“The three-year ECF arrangement aims to support Mozambique’s economic recovery and reduce public debt and financing vulnerabilities, while promoting higher and more inclusive growth through structural reforms,” the IMF statement explains.

In its fourth review, the IMF said the program’s performance “was mixed,” with three of four structural benchmarks met and two of four quantitative performance criteria met.

Mozambique’s failure to meet part of the targets was overcome in light of the “corrective measures adopted by the authorities”, as well as its “minor and temporary nature”, namely in terms of not accumulating new arrears of public external payments and in the “performance criterion relating to the domestic primary balance, which was not met, partly due to higher than expected expenditure on wage bill and debt service”.

Quoted in the statement, the Fund’s deputy executive director, Bo Li, acknowledges that the
efforts of the Mozambican authorities “to ensure fiscal discipline are welcome”.

“Further fiscal consolidation is needed given Mozambique’s high debt and tight financing conditions. In this regard, revenue mobilization and rationalization of wage bill expenditures are essential to create fiscal space for high-priority social and development expenditures.

Improving the execution of social expenditures and avoiding future payment arrears remain
key,” says Bo Li. This ECF program was approved in May 2022 and provides total financing of US$456 million (€421.3 million) for Mozambique.

On October 9th last year, Mozambique held general elections, in a ballot in which Daniel
Chapo was proclaimed the fifth President of Mozambique.

Chapo’s election has, however, been contested on the streets since October, with successive
demonstrations and strikes, in which currently, in addition to contesting the election results,
Mozambicans complain, among other things, about the high cost of living and lack of jobs.

Source: Lusa