Mozambique expects to sign a new program with the IMF this year

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Mozambique expects to sign a new program with the IMF this year

1:36 CAT | 01 Jul 2025

Photo: Presidency

The Mozambican president, Daniel Chapo, said yesterday that he expects to sign a new support program with the International Monetary Fund (IMF) this year, in line with the current government’s vision and public sector reforms.

“Later this year, if everything goes well, we will sign a new program that will allow us, with the government’s new vision, to truly continue an excellent relationship with the IMF,” Daniel Chapo told journalists in Seville after meeting IMF deputy managing director Nigel Clarke on the sidelines of the 4th United Nations International Conference on Financing for Development (FFD4).

“But now with a new vision based on reforms in the public sector and, above all, issues related to the need to create a good business environment in Mozambique, so that we can continue to attract both national and foreign investment for the growth and economic, social and environmental development of Mozambique,” added Chapo, who took office on January 15 of this year.

The Mozambican head of state highlighted that, on the IMF side, the “reception is very good”, and he foresees the “strengthening of good relations of friendship and cooperation”, with the fund being “one of Mozambique’s partner institutions”.

The IMF’s deputy managing director, Bo Li, had already guaranteed, on May 17, in Maputo, that the institution would move forward with a new program to support Mozambique’s stability in the coming months.

“Our team will work together. In the coming weeks and months we will discuss a new program and we are committed to supporting the Mozambican economy to help maintain macroeconomic and financial stability,” Bo Li said after being received by the Mozambican head of state at the Presidency of the Republic.

The IMF and the Mozambican authorities agreed to end consultations under the current aid plan and begin negotiations to design a new one, the international financial institution announced in a statement on April 18.

“To better align IMF support with the new government’s priorities and vision, the Mozambican authorities have requested the initiation of discussions for a new IMF program,” the concurrent statement said.

In the same text, the Washington-based international organization declared that “the Mozambican authorities and IMF staff have reached an understanding not to proceed with the remaining Reviews under the ECF [Extended Credit Facility]-supported arrangement.”

The ECF program was approved in May 2022 and provides for a total financing of US$456 million (€416.2 million) to Mozambique, with four tranches having already been released.

On June 15, 2024, the IMF announced a “technical agreement” with the government of Mozambique on economic policies to conclude the fourth review of the assistance program to the country, allowing for the disbursement of an additional €55.9 million (exchange rate at the time).

Previously, the third review of this program (over 36 months), carried out in January, was concluded, releasing the third tranche, of US$60.7 million (€56.6 million), for budgetary support. At the time, total disbursements to Mozambique under this ECF amounted to approximately US$273 million (€254.7 million).

The IMF argued in early March that Mozambique needed “fiscal consolidation” in 2025 to ensure the sustainability of public accounts, given the significant budgetary slippage seen in the previous year.

“Preliminary estimates suggest that there were significant fiscal slippages in 2024 that are in part explained by the slowdown in economic activity during the last quarter,” said Pablo Lopez Murphy, quoted in an IMF statement on 5 March on the assessment of the ECF agreement.

Source: Lusa