Negotiations between Mozambique and the IMF need to overcome “significant challenges”

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Negotiations between Mozambique and the IMF need to overcome “significant challenges”

8:51 CAT | 18 Apr 2017

Negotiations between Mozambique and the International Monetary Fund (IMF) for a new country support program have yet “significant challenges” to overcome, says the institution’s representative in Maputo.

“Discussions on a new IMF program need to overcome significant challenges,” Ari Aisen wrote in a presentation on recent economic developments in Mozambique.

The communication was released today by the IMF office in Maputo after being presented at an event sponsored by the Fund with the U.S.-Mozambique Chamber of Commerce, on April 12, in the Mozambican capital.

At the top of the list of challenges, Ari Aisen stresses the need for “effective progress on the audit on Ematum, MAM and Proindicus,” the companies involved in hidden state-guaranteed debt.

In the presentation, the IMF official recalls that April 28 is the new date for the expected delivery to the Attorney General’s Office of Kroll’s audit report.

Another challenge is the public debt sustainability, given that “DSA [Debt Service Analysis]and debt strategy are still being updated”.

Ari Aisen believes that the debt rescheduling [renegotiation] process itself has also been facing specific challenges: “not clear overview/strategy, slowdown in negotiations” and “new credits being signed”.

Furthermore, there remains the challenge of “solid macroeconomic policies to be implemented,” despite “some progress on subsidies”, for example, with the end of fuel and bread subsidies, but other state aid “still needs to be removed”

In the framework of macroeconomic policies, the IMF representative also points to the challenge of “containing the expansion of the wage bill” and “limiting the fiscal risks presented by some large public enterprises.”

Regardless of the ongoing negotiations, IMF technical missions continue to support “key reforms” at the Bank of Mozambique, Ministry of Economy and Finance, Tax Authority and Statistics National Institute.

The IMF stresses that the document released today “has been prepared to elicit a discussion only,” therefore it does not necessarily represent the views of the IMF, its management, or the Executive Board,” as “data and projections will be updated during coming IMF missions (new program or Article IV)”

Source: Lusa