Eaglestone consultancy’s chief economist told Lusa today that the new International Monetary Fund (IMF) programme in Mozambique is positive, not so much because of the amount involved but because of the confidence it instils in investors.
"More than the financial support of around 450 million dollars, it is important that Mozambique has signed a three-year programme aimed at supporting the country’s economic recovery and introducing several measures to reduce public debt and improve the country’s financial vulnerabilities," Tiago Dionísio told the Lusa news agency in the week the IMF "returned" to Mozambique.
On Monday, the Fund announced a financing agreement worth 470 million dollars (445 million euros) with Mozambique, which was welcomed as "the start of a new phase towards the resumption of sustainable growth in our economy", in the words of Mozambique’s Minister of Economy and Finance, Max Tonela.
In total, 470 million dollars will be disbursed by the IMF through an Extended Credit Facility programme until 2025, with the aim of helping the country ensure sustainability, inclusive growth and long-term macroeconomic stability.
"The chances of success [of the reforms] increase with the IMF, not only because of technical issues, such as the introduction of a sovereign wealth fund, which is not exactly easy," stressed Tiago Dionísio, who considers the support for Mozambique to mark a new phase in relations between the two parties.
"The IMF never really left, but this is the resumption of a formal relationship between the two parties, and the Fund’s involvement means that more aid will come from other international investors," the economist pointed out, recalling the difficulties following the disclosure of the hidden debts scandal.
"Mozambique has always needed external financial aid for projects and for the Budget, and after the hidden debts scandal the tap was turned off, not just by the IMF but also in terms of grants from other external bodies, and this will allow the resumption of the external assistance the country needs," added Eaglestone’s chief economist.
Among the most important reforms that will now receive technical and political assistance from the Fund, Tiago Dionísio highlighted, in addition to introducing a sovereign wealth fund, reducing public debt, which currently stands at around 100% of GDP, managing natural gas revenues in the coming years and implementing an inflation-targeting system.
The IMF was one of several international partners that suspended financial assistance following the disclosure of loans taken out by state-owned companies that had not been declared either to parliament or to international donors. The affair became known as the "hidden debts scandal" and involved several members of the government then led by Armando Guebuza, in which the current President was Minister of Defence, the area in which the state-owned companies that contracted the concealed loans operated.
