Mozambique: IMF program “will hurt a little”

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Mozambique: IMF program “will hurt a little”

4:31 CAT | 26 May 2022

Photo: O País

Mozambique’s President Filipe Nyusi said yesterday that the new International Monetary Fund (IMF) financial program will lead to adjustments in the country’s management that could “hurt a little”.

“It will hurt a little, but something needs to be done” instead of “waiting”, said the head of state on the sidelines of an official visit to Ghana, in statements broadcast by Mozambican television STV.

“If we keep waiting, we will eat everything today and tomorrow we will have nothing to eat. So it’s better to eat in an organised way so we can resist longer,” he said, illustrating the strategy of rationalisation of resources that he said was the basis of the agreement.

“The IMF, when it returns, returns with measures that require financial discipline and some measures will hurt,” Nyusi reiterated, while referring details to a future opportunity “to communicate to the nation”.

“We will have to tighten some measures, not to make the Mozambican people suffer, but to see if we are able to empower” the country, he said.

According to Nyusi, the new program requires Mozambique to make adjustments at the time of investing. “Instead of buying ten houses, you buy three,” he explained, and with the funds “from the other seven, it is possible to build one more school” or “increase the quality of the health service”.

The head of state says that the path involves promoting “more work, financial discipline, honesty”. “Some measures are already being taken, such as the fight against corruption,” he stressed.

Nyusi said it was necessary to “avoid mistakes made that would have us put out” of the IMF’s support programs.

Alexis Meyer-Cirkel, IMF representative in Mozambique, said on Saturday in an interview with Lusa that he believes in the reforms being carried out in the country, which had led to the approval of the financing agreement worth US$470 million (€445 million) to be applied through to 2025.

Meyer-Cirkel said the commitments do not require a tax hike or other austerity to fill the state’s coffers. “There is no tax increase,” he said. “The idea is to expand the tax base and even lower levels in the margin of some rates,” in order to promote growth after a series of historical shocks, including the ‘hidden debts’, cyclones, Covid-19 and the armed attacks in the north.

Details of the IMF program should be published before the end of the month, Meyer-Cirkel concluded.

Source: Lusa