The director of the African Department of the International Monetary Fund (IMF) said that discussion of the financing programme for Mozambique would resume in the coming weeks, while stressing that any debt must be sustainable.
“Prior to the outbreak of the pandemic, we were actually in discussion on the medium term program that the government had requested to be able to support the country, but those discussions were likely to take, you know, a few months. So when the pandemic hit, what we have done is to switch to our rapid disbursing facility, rapid credit facility,” Abebe Aemro Selassie replied when asked about the status of the latest discussions.
At a virtual press conference in Washington on Tuesday about the report on the Regional Economic Outlook for Sub-Saharan Africa, Selassie explained that the IMF and Mozambique were “holding discussions under that [rapid credit facility], and and will be publishing the outcome of our discussion projections in the next couple of weeks”, once the Fund had processed the Mozambican government’s request. But he warned that “before proceeding with lending to Mozambique, we have to ascertain that debt is sustainable”.
According to Fund forecasts released yesterday, Mozambique’s public debt is expected to increase from 109% of GDP in 2019 to 125.4% this year, decreasing slightly to 124.9% in 2021.
At the press conference, Selassie pointed out that the IMF had US$11.5 billion available to help the 32 countries that have already applied for aid, and that around US$300 million of this would be used to offset payments falling due on Fund loans this year.
Asked why he was advocating a forgiveness of official bilateral debt but not commercial loans or sovereign debt issues made in international markets, Selassie said that the analysis “has to be done on a case-by-case basis”, and underlined that the support of the international community was essential.
“Even before the pandemic, the region’s economies already had very high levels of debt, and the effect of the measures against COVID-19 will cause debt to increase in many countries. Hence the need to be very proactive,” Selassie said, adding that any debt relief that official bilateral creditors could provide would give would give countries more room to deal with difficulties.
While not responding directly to questions as to why the Fund was advocating debt relief by official creditors and not by investors in sovereign debt securities or commercial loan creditors, Selassie said that any assistance was nonetheless welcome.
“We’re very happy that this is being taken on by the G20 and discussions are underway, and happier still that private sector creditors are also considering relief to the countries most impacted, because I cannot stress enough how exceptional these times are,” he concluded.
Source: Lusa via Club of Mozambique