The International Monetary Fund (IMF) has signed a new Extended Credit Facility (ECF) agreement with Mozambique for an amount of $456 million spread over three years, with an immediate disbursement of 91 million dollars, indicates a press release made public on Monday, May 9.
The financing aims to support the reforms of the Mozambican authorities, intended to revive an economy which has suffered from Covid-19. According to the International Monetary Fund, “Mozambican economy was in the red in 2020, with a recession at -1.2%, while the poverty rate fell from 61.9% in 2019 to 63.3% in 2020. “.
The Russo-Ukrainian war hit the economy of the country of Mozambique hard. The country experienced inflation at 6.7% last March, due to rising fuel and food prices.
And it is in relation to this situation that the authorities “plan to strengthen the management of public enterprises and their debts, by improving the management of budgetary risk and the transparency of the debt, and by strengthening the management of public finances”. And “a sovereign wealth fund should also be created to manage future gas revenues at the same time as the implementation of new governance reforms”, underlines Maputo.
“Mozambique has managed the pandemic relatively well, maintaining macroeconomic stability and reform momentum, even as the country suffered a series of shocks, culminating in the effects of the war in Ukraine,” noted Bo Li, Deputy Managing Director of the IMF, considering that “the room for maneuver being now limited, the priorities are to support the economic recovery in progress, and to attack the vulnerability of the debt”.