The International Monetary Fund (IMF) is about to approve a new disbursement of 60 million dollars to support Mozambique’s State Budget (SB), under the Extended Credit Facility (ECF) mechanism. The final decision, expected later this year, depends on the conclusion of the report of the recent IMF mission led by Pablo Lopez Murphy, who spent 15 days in the country as part of the third review.
Alexis Meyer, IMF resident representative, discussed the issue during the seminar “Resilient Mozambique, Recent Milestones in Fiscal and Financial Capacity Development” in Maputo, stressing that the disbursement is linked to the finalization of the ongoing report. Meyer acknowledged Mozambique’s significant progress in public finance management, including the modernization of financial institutions, the implementation of the Single Treasury Account (CUT) and the Fiscal Decentralization Law.
“Mozambique maintains its projections for economic growth at 6%,” said Meyer, noting that economic growth is driven by natural resources, despite a slower pace in the construction and manufacturing sectors. However, Meyer warned of the increase in internal debt due to the reduction in external financing, not only for Mozambique, but also for other countries in the region.
Esther Palácio, the IMF’s technical coordinator, highlighted significant improvements in the consolidation of the central government’s main public finance management functions, including budget planning, execution, accountability and auditing.
The Minister of Economy and Finance, Max Tonela, shared a positive medium-term economic outlook, highlighting, however, risks associated with the situation in Cabo Delgado, natural disasters and debt levels. He acknowledged that the outlook is promising, but subject to challenges, especially due to terrorist action in northern Cabo Delgado and natural disasters caused by climate change, which put pressure on fiscal space and national indebtedness.
The IMF’s final decision on disbursement awaits the conclusion of Pablo Lopez Murphy’s report in the coming weeks, highlighting the importance of this funding to sustain Mozambique’s public finances and boost its economic development.
