IMF Executive Board Approves US$309 Million in Emergency Assistance to Mozambique to Address the COVID-19 Pandemic

IMF News, April 24, 2020

Source details

Canonical URL: IMF Executive Board Approves US$309 Million in Emergency Assistance to Mozambique to Address the COVID-19 Pandemic

Press Release No. 20/190; April 24, 2020.
The Executive Board approved a disbursement under the Rapid Credit Facility (RCF) of SDR 227.2 million (about US$ 309 million at today’s exchange rate) to help Mozambique meet urgent balance of payment and fiscal needs stemming from the COVID-19 pandemic.
The IMF financial support is intended to make a substantial contribution toward fulfilling needed increases in health spending and other social safety nets.

The pandemic is expected to have a significant impact on Mozambique’s economy, interrupting a nascent recovery following two powerful tropical cyclones that struck in 2019.
Significant disruptions are emerging in services, transport, agriculture, manufacturing and communications.
A much worse external environment is affecting export-oriented sectors, such as mining.
The weakened macroeconomic outlook and deteriorating fiscal situation have created urgent external and fiscal financing needs.

Government measures:
- Increase health spending.
- Strengthen social protection to the most vulnerable.
- Support micro-businesses and small and medium-sized enterprises (SMEs).
Bank of Mozambique measures:
- Reduced the policy rate.
- Provided additional liquidity in both local and foreign currencies to the financial market.

The IMF’s emergency financial support under the RCF, along with additional donor grant financing it will help to catalyze, will contribute to addressing Mozambique’s urgent balance of payments needs generated by the pandemic.
Immediate priorities for the authorities:
- Limit the impact of the pandemic.
- Preserve macroeconomic and financial stability.
- Enact higher health spending and measures to protect the most vulnerable and support micro-businesses and SMEs.
Given Mozambique’s limited fiscal space and high public debt, additional external support is urgently required:
- Preferably in the form of grants and highly concessional loans.
- 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.
Governance and transparency measures to prevent corruption and misuse of emergency financing:
- Publish large public procurement contracts.
- Conduct and publish ex-post audits of funds’ use.
Medium-term priorities once the pandemic eases:
- Resume fiscal consolidation.
- Strengthen debt management and transparency to ensure public debt remains sustainable.
- Implement structural reforms to support inclusive and sustainable growth.

The release references the IMF Lending Tracker (emergency financing request approved by the IMF Executive Board) and the IMF Executive Board calendar for more information.

Source: IMF press release, April 24, 2020.