The International Monetary Fund (IMF) has announced that Mozambique has waived a financial support program, focusing the discussions during their virtual meetings solely on technical and macroeconomic developments, as well as the political reform agenda.
“Although the authorities expressed interest in a program in early 2020, before the pandemic and the subsequent disbursement under the Rapid Credit Facility in April, they did not ask for negotiations to start now,” explained a spokeswoman for the Fund, when asked by news agency Lusa about the absence of an announcement about a financial aid program, at the end of the virtual meetings that lasted until 29 March.
“Discussions centered on macroeconomic prospects and policies to manage the difficult economic circumstances created by the COVID pandemic, and the authorities’ reform agenda for the next years”, the report reads.
The report continues:
“Staff and the authorities share a broadly similar assessment of economic prospects for 2021 and the medium-term, with staff acknowledging the authorities’ adroit economic management in the face of a series of shocks in the past years.”
The Fund predicts that Mozambique experienced a recession of 1.3% last year, and is expected to experience economic growth of 1.6% this year, with external public debt falling from US$15.2B in 2020 to US$14.7B this year.
On March 4, the financial information agency Bloomberg, quoting the Ministry of Finance, wrote that Mozambique would begin technical discussions on budgetary and macroeconomic indicators on March 15, including the budgetary framework between 2022 and 2024, in addition to seeking more information on the ongoing economic reforms to come up with the outlines of an Expanded Financing Program by March 26.
Several times in the past year, Mozambican authorities had defended the need for an IMF financial support program, following the deteriorating economic conditions and the country’s first economic recession in recent decades.