Mozambique’s Sovereign Fund receives $134.6 million in nine months

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Mozambique’s Sovereign Fund receives $134.6 million in nine months

12:36 CAT | 12 Nov 2024

File photo: Notícias

In the first nine months of the year, the Mozambican state collected US$134.6 million (€125.5 million) in revenues from oil and natural gas exploitation, which were invested in the new Mozambique Sovereign Fund (FSM – Fundo Soberano de Moçambique).

The economic and social report on the implementation of the State Budget from January to September, from the Ministry of Economy and Finance, to which Lusa had access this Tuesday, indicates that this amount includes US$74.1 million from 2022 and 2023, and US$60.45 million (€56.4 million) from this year.

“They were deposited in the Transitional Account based at the Bank of Mozambique, under the terms of Article 6 of Law No. 1/2024 of January 9, which creates the Mozambique Sovereign Fund,” the document reads.

The Mozambican government has already completed all the necessary instruments to operationalize the FSM, which will be financed with revenues from gas exploitation projects, the national director of Studies and Development Policies of the Ministry of Economy and Finance told Lusa on April 2.

Enilde Sarmento explained at the time that two of the three main instruments still pending had already been finalized, namely the Management Agreement, which will be signed between the government and the governor of the central bank, and the Investment Policy, in addition to the fund’s regulations – which were completed and approved on March 12.

In the meantime, the establishment of two committees was also completed: the Investment Advisory Board, whose seven members are appointed by the government, and the Supervisory Committee, with members drawn from civil society, and which is the responsibility of parliament.

On 15 December last year, the Mozambican parliament approved the creation of the FSM with revenues from natural gas exploration, which, by the 2040s, are expected to reach US$6 billion (€5.6 billion) per year.

“Projections indicate that annual gas exports could amount to around US$91.7 billion (€85.5 billion) nominal over the life cycle of the project, in a scenario in which all development initiatives approved by the Government to date are in operation. In this scenario, annual revenues for the state will peak in the 2040s at over US$6 billion per year,” then-Minister of Economy and Finance, Max Tonela, explained at the time.
The Mozambican government estimated on 12 March of this year that the FSM would be operational in April, following the approval of regulations on that day, as stated by the Deputy Minister of Economy and Finance, Amílcar Paia Tivane.

“It also defines the procedures to ensure the transfer of resources associated with the exploration of liquefied natural gas, and revenues from the exploration of future projects in the oil and gas sector, setting the proportion of 60% for the State Budget and 40% for the Sovereign Fund account in the first 15 years, and in a proportion of 50/50 from the 16th year onwards,” Amílcar Paia Tivane explained in March.

The International Monetary Fund previously assessed the approval of the FSM by parliament as “an important step” to ensure the “transparent and solid management” of natural resources.

Source: Lusa