Mozambique: NGO seeks debate on creating sovereign wealth fund for gas revenues

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Mozambique: NGO seeks debate on creating sovereign wealth fund for gas revenues

8:14 CAT | 09 Mar 2020

File photo: Social Media

The NGO Centre for Democracy and Development (CDD) on Tuesday [ March 3) advocated a broad and comprehensive public debate on the creation of a sovereign wealth fund for gas revenues, accusing the Bank of Mozambique, the entity responsible for the proposal, of ignoring civil society.

“In a country with a history of lack of transparency in the management of public funds and with dubious processes of distribution of national wealth, the process of creating a sovereign wealth fund should be informed by a broad and inclusive public debate to prevent Mozambique from making the same mistakes as in the past,” according to a the DDC on Tuesday.

The idea of a sovereign wealth fund has been under debate recently, with the Bank of Mozambique, the entity responsible for the proposal, foreseeing the finalisation of the project this year, which, according to the bank’s governor, Rogério Zandamela, should count on the opinions of all stakeholders.

For the CDD, the debate has been excluding Mozambican civil society, which shows that the country runs the risk of making mistakes regarding transparency.

“In August 2019, six civil organisations, including the CDD, wrote a letter accusing the bank’s governor of ignoring several requests to participate in debates on the creation of the sovereign fund,” the statement said.
“The lack of openness for an inclusive debate is already a sign of the lack of transparency in the process,” the Mozambican NGO said.

On the other hand, the CDD noted that the country needs to debate the relevance of a sovereign wealth fund, warning that revenues from exploration do not justify the creation of a savings mechanism.
“Although the most optimistic estimates point to revenues of $95 billion, it is not clear that all the money will enter the state coffers. Even assuming the entry of expected revenues, its impact on the lives of the population will be delayed by the payment of hidden debts, a situation aggravated by the default of Mozambique,” the document of the CDD said.

Mozambique has natural gas reserves estimated at around 270 trillion cubic metres, whose exploitation will start in the coming years, which forces the country to prepare for the advent of massive volumes of investment, some of which are already underway, and for careful management of the resulting revenues.

The megaprojects of gas exploration will start in 2022 and should place Mozambique among the world’s largest producers in the next ten years, with the International Monetary Fund (IMF) predicting that the country’s economy could grow more than 10% per year.

Source: Lusa