Mozambique: Private sector considers IMF assistance ‘positive sign’

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Mozambique: Private sector considers IMF assistance ‘positive sign’

9:29 CAT | 30 Mar 2022

Photo: TV Ação

The Confederation of Economic Associations (CTA) of Mozambique, the country’s largest employers’ organisation, described the announcement of the resumption of financial assistance from the International Monetary Fund (IMF) as a “positive sign,” on Tuesday noting that it creates “a good outlook.

“For us, the private sector, this is a positive sign and a good outlook for the financing of Mozambique’s economy, including strengthening international reserves,” said the vice president of the CTA, Prakash Prehlad, speaking at a press conference in reaction to the IMF announcement made on Monday.

Prehlad said that the new financial assistance programme would promote sustainable and inclusive growth and long-term macroeconomic stability.

“Investor confidence is starting to improve. There are still challenges to be addressed, namely the security component, the democratic rule of law and compliance with the law and legality, which will help minimise corruption,” he emphasised.

The CTA deputy chairman noted that the IMF had accepted the new financial assistance programme because it recognised “the Mozambican government’s reforms to improve the transparency of management and rationalisation of public spending.

Another critical factor, he said, was the hidden debts trial.

On Monday, Mozambican President Filipe Nyusi called the resumption of IMF financial assistance to the country, suspended since discovering the so-called hidden debts, a “great gain”.

“This is a great gain for us. They trust us,” said Filipe Nyusi, speaking to members of the ruling Mozambique Liberation Front (Frelimo) in Inhambane province, southern Mozambique, in an audio message released today by the Presidency.

The Mozambican head of state said that the agreement with the IMF provides for the disbursement of financial aid worth US$470 million (€428 million). This amount had been mentioned on Monday by the head of the mission of this institution to Mozambique, Álvaro Piris.

“It is a programme that will accelerate the economic recovery of Mozambique, particularly because of Covid-19, terrorism and natural disasters,” stressed Filipe Nyusi.

The instrument approved by the IMF provides for a rapid recovery of the Mozambican economy and is based on promoting good governance, combating corruption, macroeconomic stability and debt control, Nyusi added.

The resumption of financial assistance, he continued, encourages Mozambique’s other partners to cooperate with the African country, as the IMF acts as a beacon.

“Nobody was giving us anything,” after the discovery of the hidden debts, and “I was known as the president of the country of thieves,” said Filipe Nyusi.

ALSO READ: Mozambique: Resumption of IMF financial aid ‘great gain’ for country – president

This is the first time the Fund has financed Mozambique since the disclosure of the so-called hidden debts scandal in 2016, with only occasional financial aid being recorded following specific disasters, such as the Covid-19 pandemic or cyclones Kenneth and Idai in 2019.

“In recent years, Mozambique has been affected by a series of severe shocks that risk intensifying vulnerabilities and worsening socioeconomic conditions,” the IMF said, pointing to the examples of the attacks in the north, which has displaced over 800,000 people and delayed the development of liquefied natural gas projects.

The programme aims to “focus on growth, fiscal sustainability and reforms in governance and public finance management, balancing financing with a moderate adjustment that will rebuild fiscal space and reduce debt and financial vulnerabilities,” the IMF added.

Source: Lusa