IMF approves $60m for Mozambique

The International Monetary Fund (IMF) has completed its Fourth Review under Mozambique’s Extended Credit Facility (ECF) arrangement and the 2024 Article IV Consultation, granting immediate access to approximately $60.03 million. The funds are intended for budget support, raising the total disbursements under the ECF to around $330.14 million.

The programme’s performance was mixed, with three out of four structural benchmarks and two out of four quantitative performance criteria met. The Board approved waivers for missed criteria related to debt management and domestic primary balance, due to temporary issues and higher-than-expected wage bill spending.

Key discussions focused on rationalising the wage bill, improving governance and transparency of state-owned enterprises, and maintaining exchange rate stability since mid-2021. The Board also reviewed financing assurances and approved modifications to performance criteria.

According to the IMF review, inflation remains within the target band, allowing for potential gradual easing of monetary policy. Fiscal consolidation efforts are crucial to reducing debt vulnerabilities and creating space for social spending. The adoption of regulations for the Sovereign Wealth Fund marks progress in managing natural resource wealth transparently.

Deputy Managing Director Bo Li highlighted the need for continued fiscal discipline, revenue mobilisation, and rationalised wage bill spending. He further emphasised the importance of a balanced fiscal and monetary policy to maintain macroeconomic stability and resilience against external shocks. Moreover, enhancing governance, public financial management and climate resilience remains essential for Mozambique’s sustainable development.

Attribution: IMF