APA-Maputo (Mozambique) The International Monetary Fund (IMF) has approved US$60.6 million budgetary support for Mozambique in a move seen as a thumbs-up for the southern African country’s economic policies and recovery prospects.
In a statement late Thursday, the Bretton Woods institution said its board had completed the second review under the three-year Extended Credit Facility (ECF) arrangement for Mozambique and had okayed “the immediate disbursement of SDR 45.44 million (about US$ 60.6 million), usable for budget support.”
This brings Mozambique’s total disbursements under the ECF arrangement to about US$212.1 million, it said.
The ECF arrangement, which was approved in June 2021, aims to help Mozambique cope with the impact of the COVID-19 pandemic, reduce public debt and financing vulnerabilities, and foster higher and more inclusive growth through structural reforms.
The total amount of the ECF arrangement is about US$590.2 million, which means Mozambique has so far received under 40 percent of the support with a year still to go.
The IMF, however, praised Mozambique’s programme performance, which has been broadly favourable despite some slippages in the fiscal area.
Programme performance has been broadly favourable, though with notable slippages in the fiscal area, while important program commitments in the areas of fiscal governance and anti-corruption were completed,” the Fund said.
It noted that the Maputo authorities had taken substantive actions to address macroeconomic challenges and keep the programme on track, especially to reduce the wage bill and keep the fiscal outlook aligned with programme targets.
“Growth is projected to increase in 2023, driven by increasing liquefied natural gas (LNG) production, agriculture and services activities,” the Fund said.
Mozambique is one of Southern African Development Community member states that have witnessed significant findings of natural gas reserves in recent years. Others are Namibia, Tanzania and Zimbabwe.
Real gross domestic product growth is forecast to rise to seven percent this year from 4.2 percent in 2022, according to IMF figures on Thursday.
Expected increases in LNG exports are expected to improve the current account balance going forward.
The IMF was happy that Mozambique’s inflation rate had returned to single digits due to proactive monetary policy and favourable import prices for fuel and food.
However, the IMF warned that Mozambique faces significant downside risks to its outlook such as delays to LNG projects, inflationary pressures from higher wages, and the threat of natural disasters such as tropical cyclones.
It called on the Mozambican government to continue implementing sound policies and reforms to enhance resilience, foster social cohesion, and create opportunities for all.
JN/APA