Lack of IMF and donor support puts Mozambique in a difficult situation – Zandamela

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Lack of IMF and donor support puts Mozambique in a difficult situation – Zandamela

12:11 CAT | 27 Oct 2017

File photo / Rogério Zandamela

The governor of the Bank of Mozambique said yesterday that the country would continue to face a difficult situation and would have to undertake deeper reforms because of the prolonged suspension of aid by the IMF and international donors.

“The country can live another year [without the help of donors], but it is a difficult life because of the International Monetary Fund decision,” Rogério Zandamela told a press conference at the end of the Mozambican central bank’s Monetary Policy Committee (CPMO) meeting.

By announcing that it does not foresee a financial cooperation agreement with Mozambique in 2018, the IMF has created a higher risk environment for the Mozambican economy, he added.

“We live in a higher risk environment than before, there is no doubt about it,” and this requires “fiscal reform and other efforts to compete in the economy, even deeper than those we had in mind”.

“It’s a serious matter, we have to work, duplicate our efforts and our energies, to deal with this new reality,” Zandamela insisted. The country should try to achieve positive results by walking virtually alone from the point of view of state budget support.

“This is not easy” he said, adding that the situation “complicates the ability to manage monetary policy.”

Zandamela said that, in the current context, the Mozambican authorities must implement fiscal reforms, making revenue collection and expenditure more efficient, especially at the level of subsidies, and restructure public companies and debt.

The IMF announced this month that it does not foresee signing any financial cooperation agreement with Mozambique in 2018, persisting in its demand for the full disclosure of the audit report on the debts secretly guaranteed by the former Mozambican government between 2013 and 2014, amounting to US$2 billion.

Mozambique’s main donors suspended their aid after the discovery of these debts in April last year, making resumption of support conditional on an audit of the country’s public debt and a new agreement with the IMF.

Source: Lusa