Mozambique: Canadian Minister of International Development visits, announces US$48.6 million in ...
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The Mozambican government plans to transfer, on average, 2.103 billion meticais (32.9 million dollars) annually to the Sovereign Fund of Mozambique, until 2027, as foreseen in the 2025–27 Medium-Term Fiscal Scenario (MTFS).
“With the implementation of the new Sovereign Fund law, an average of US$49.4 million dollars is expected to be allocated to the State Budget, equivalent to 3,154.1 billion meticais, during the period of this MTFS. Likewise, US$32.9 million, equivalent to 2,102.7 million meticais,, will be allocated to the SWF [Sovereign Wealth Fund],” the document reads.
In the MTFS for the period 2025-2027, approved this month by the Council of Ministers and to which Lusa had access on Thursday, the government recalls that the amount of liquefied natural gas (LNG) revenue that must be transferred from the Transitional Account to the State Budget in a given budget year is set at 60% of the revenues projected for that year until 2038, then falling by 50%, with the remainder being “channelled to the SWF”.
Mozambique has the third-largest natural gas reserves in Africa, estimated at 180 million cubic feet.
The MTFS recalls that gas revenues must meet specific “objectives”, namely, through the State Budget, to “finance domestic investments in priority areas”, according to the National Development Strategy (ENDE), but also “to finance economic and social growth and development in areas of infrastructure, agriculture, renewable energy and industry”.
Through the Sovereign Fund, to “be managed based on a clearly defined investment policy, aiming to maximize long-term returns and guarantee the country’s financial security”, it is expected that these resources will be “initially invested in low-risk financial assets”.
“LNG revenues for the State Budget offer the potential for more significant growth, but are also subject to price volatility and fluctuations in global demand,” the document warns.
The International Monetary Fund previously considered parliament’s approval of the SWF at the end of 2023 “an important step” to ensure “transparent and solid management” of natural resources.
Lusa reported in May that, in the first quarter of the year, the Mozambican state collected US$94.2 million (€87.4 million) in revenue from oil and natural gas exploration , applied to the new SWF.
According to data from the economic and social balance of the execution of the State Budget, from January to March, these revenues include US$73.37 million from 2023, US$20 million from the first quarter and US$800,000 from 2022.
The Mozambican government has already completed all the instruments necessary to operationalize the Sovereign Wealth Fund , which will be financed with revenue from gas exploration projects, the national director of Development Studies and Policies at the Ministry of Economy and Finance told Lusa on April 2.
Enilde Sarmento explained at the time that two of the three main instruments necessary to operationalize the Sovereign Wealth Fund had already been finalised, namely the Management Agreement, to be signed between the government and the governor of the central bank, the Investment Policy and the Fund’s Regulation, completed and approved on March 12.
The other processes were being finalised, Sarmento added, namely the constitution of two committees: the Investment Advisory Council, whose seven members will be appointed by the government, and the Supervision Committee, with members from civil society indicated by parliament .
On December 15, the Mozambican parliament approved the creation of the Sovereign Wealth Fund, with revenue from natural gas exploitation which, by the 2040s, should reach 6 billion dollars annually.
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