The International Monetary Fund (IMF) remains upbeat in its outlook for Mozambique, having approved a $456-million extended credit facility arrangement with the country earlier this year.The three-year arrangement will help support Mozambique’s economic recovery and its policies to reduce public debt and financing vulnerabilities – thereby creating space for priority investments in human capital, climate adaptation and infrastructure.Speaking at a recent press briefing, Abebe Aemro Selassie, director of the IMF’s African department, elaborated: “It is a relatively ambitious programme that will look to address the significant macroeconomic challenges Mozambique has been facing in the wake of the Covid-19 pandemic. “The aim is to help bridge the country and prepare it for the potentially very strong outlook going forward as it becomes a significant natural gas exporter in the coming years.”Selassie said in the near term, the emphasis would be on making sure that social protection was advanced and that a balance was struck between addressing the infrastructure the country had and required, along with any other development progress it needed to make. “As the IMF, we are promoting governance and transparency as another core aspect of the programme, and we look forward to supporting the authorities’ ambitious reform agenda in this vein.”In September, IMF staff reached an agreement on the policies related to the programme, following a successful mission to Mozambique. This will see $63.8 million of the funds disbursed in December this year.“Mozambique’s economic recovery continues, with growth in the first half of 2022 above expectations and an increased output projection of 3.8% this year, following a successful public vaccination campaign and a robust recovery of services, industry and agriculture,” said Alvaro Piris, leader of the IMF team who visited the country. “The increase in international food and fuel prices, however, continues to pose a challenge. The authorities are taking measures to mitigate the impact on the cost of living and to strengthen its economic recovery.”He said global commodity price increases had supported a noticeable rebound in exports, but had also pushed up food, fuel and transportation costs. These were driven mostly by Russia’s invasion of Ukraine and the related increases in global fuel and food prices. Inf lation rose to 12.1% in August, the highest level since September 2017. “The Bank of Mozambique (BM) has responded proactively to contain inf lation, raising the policy rate to 15.25% in March and continuing the tightening cycle started a year ago,” said Piris.
