Coronavirus: IMF approves US$309 million emergency assistance for Mozambique to address pandemic

25 Avril 2020

Maputo, Mozambique, April 25 (Infosplusgabon) – Concerned that the COVID-19 pandemic will have a significant impact on Mozambique’s economy, the International Monetary Fund (IMF) has approved a disbursement under the Rapid Credit Facility (RCF) of US$309 million to help the southern Africa country meet urgent balance of payment and fiscal needs stemming from the pandemic.

The impact would interrupt a nascent recovery following two powerful tropical cyclones that struck Mozambique in 2019, dashing prospects of a nascent economic recovery.

According to the IMF, significant disruptions are emerging in the country’s services, transport, agriculture, manufacturing and communications coupled with a much worse external environment affecting export-oriented sectors, such as mining.

In its bid to mitigate the impact of the pandemic and preserve macroeconomic stability, the Mozambican government has taken several steps to increase health spending, strengthen social protection to the most vulnerable, and support micro, small, and medium-sized businesses

Following the Executive Board discussion on Mozambique on Friday, IMF Deputy Managing Director Tao Zhang, remarked that the authorities’ immediate priority is to limit the impact of the pandemic and preserve macroeconomic and financial stability.

“Given Mozambique’s limited fiscal space and high public debt, additional external support, preferably in the form of grants and highly concessional loans, is also urgently required to meet the country’s elevated financing needs and ease the financial burden of the pandemic,” Mr. Zhang said.

“Participation in the G20 debt standstill initiative will provide additional resources to fight the pandemic while limiting a deterioration of Mozambique’s debt liquidity indicators in the near term.

“The authorities are committed to prevent corruption and misuse of emergency financing, by strengthening transparency and accountability. In this connection, they will publish large public procurement contracts and conduct and publish ex-post audits of funds’ use.

“Once the pandemic eases, it will be critical to resume fiscal consolidation and strengthened debt management and transparency to ensure that public debt remains sustainable. It will also be important to implement structural reforms to support inclusive and sustainable growth,” he added.

FIN/INFOSPLUSGABON/ASD/GABON2020

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