## IMF Executive Board Concludes 2022 Article IV Consultation with the Republic of Mozambique and Approves US$456 Million Extended Credit Facility Arrangement _IMF News, May 9, 2022_ ## Source details **Canonical URL:** [IMF Executive Board Concludes 2022 Article IV Consultation with the Republic of Mozambique and Approves US$456 Million Extended Credit Facility Arrangement](https://www.imf.org/en/news/articles/2022/05/09/pr22145-mozambique-article-iv-consultation-and-ecf) ## Other formats - [Markdown version](/en/news/articles/2022/05/09/pr22145-mozambique-article-iv-consultation-and-ecf/index.md) - [Structured JSON version](/en/news/articles/2022/05/09/pr22145-mozambique-article-iv-consultation-and-ecf/index.json) - [Bundle manifest](/en/news/articles/2022/05/09/pr22145-mozambique-article-iv-consultation-and-ecf/bundle-manifest.json) ## Bibliographic details - Published: May 9, 2022 --- ### Arrangement approval and purpose - The IMF Executive Board approved a three-year Extended Credit Facility (ECF) arrangement for the Republic of Mozambique of SDR 340.8 million (about US$456 million), equivalent to 150 percent of the country’s quota. - An immediate disbursement of SDR 68.16 million (about US$91 million) is available upon approval. - The arrangement aims to: - Support the economic recovery. - Reduce public debt and financing vulnerabilities. - Create space for priority investments in human capital, climate adaptation and infrastructure. - Catalyze additional financing by development partners. ### Policy focus and reform priorities supported by the program - Key policy actions and reforms supported: - Establishing a sovereign wealth fund to transparently manage LNG wealth. - Mobilizing additional tax revenue and removing distortionary tax exemptions. - Strengthening public financial management and governance. - Strengthening management of state-owned enterprises and their debts. - Improving fiscal risk management and debt transparency. - Buttressing the anti-money laundering/combating the financing of terrorism (AML/CFT) framework. - Further governance reforms and anti-corruption measures. - Fiscal policy stance: - Envisages a moderate pace of fiscal adjustment that balances sustaining activity with reducing debt and financing vulnerabilities. - Maintains space for social protection spending for the most vulnerable households. - Authorities committed to a sovereign wealth fund and advised to complement this with a framework to weather commodity price volatility and consider a fiscal rule. - Monetary and financial sector policy: - The Bank of Mozambique raised its policy rate 200 basis points in March 2022. - The IMF described the prudent monetary stance as warranted given rising inflationary pressures. - The Bank’s pursuit of adopting an inflation targeting regime is commended. - Continued efforts recommended to strengthen financial sector supervision, promote financial inclusion, and address AML/CFT weaknesses. ### Macroeconomic developments and outlook - Growth and COVID-19: - Real GDP contracted -1.2 percent in 2020, the first in 30 years; growth resumed in 2021 and is becoming more broad-based. - Vaccine rollout intensified in late 2021 with 46 percent of the population having received at least one shot (42 percent fully vaccinated by end-March 2022). - Poverty increased from a poverty headcount ratio of 61.9 percent in 2019 to an estimated 63.3 percent in 2020. - Inflation and external shocks: - Inflation rose to 6.7 percent year-on-year in March 2022, driven by rising global prices and the impact of tropical storms on local food prices. - The war in Ukraine is pushing up fuel and food prices. - Medium-term prospects: - Growth excluding extractive industries is expected to rise to about 4.0 percent per year. - Higher overall growth rates are expected from large liquefied natural gas (LNG) projects set to begin production later in 2022. - Vulnerabilities and risks: - Significant risks include security concerns, high debt levels, and vulnerability to natural disasters. - The country is highly vulnerable to natural disasters; building climate resilience is critical. ### Executive Board assessment and recommendations - Directors welcomed prudent macroeconomic policy management and reform implementation despite challenging conditions. - Directors encouraged: - Maintaining focus on macroeconomic stability. - Accelerating reforms to promote inclusive growth, address governance and corruption concerns, and strengthen management of public resources. - Growth-friendly fiscal consolidation and measures to reduce public debt vulnerabilities. - Continued reforms in tax administration and public financial management. - Transparent management of future LNG resources through a sovereign wealth fund and adoption of a fiscal rule to mitigate commodity price volatility. - Continued efforts to implement measures from the “Diagnostic Report on Transparency, Governance and Corruption” and follow up on findings from the audit report on COVID-19 related spending. - Strengthening financial sector supervision and addressing AML/CFT framework weaknesses. ### Mozambique: Selected Economic Indicators (by year) - National income and prices - Nominal GDP (MT billion): 2018 896; 2019 963; 2020 975; 2021 1,054; 2022 1,173 - Real GDP growth (percentage change): 2018 3.4; 2019 2.3; 2020 -1.2; 2021 2.2; 2022 3.8 - Consumer price index (percentage change, end of period): 2018 3.5; 2019 6.7; 2020 9.0; 2021 - Government Operations (percent of GDP) - Total revenue: 2018 23.8; 2019 28.7; 2020 24.5; 2021 25.3; 2022 25.0 - Total expenditure and net lending: 2018 31.3; 2019 29.8; 2020 33.2; 2021 30.6; 2022 32.4 - Overall balance, after grants: 2018 -7.3; 2019 0.3; 2020 -5.4; 2021 -4.4; 2022 -3.6 - Primary Balance after grants: 2018 -2.9; 2019 -2.3; 2020 -1.8; 2021 -0.2; 2022 - Public sector debt - Public sector debt: 2018 106.7; 2019 99.0; 2020 121.1; 2021 104.2; 2022 101.4 - of which: external: 2018 86.2; 2019 79.4; 2020 98.7; 2021 81.1; 2022 77.6 - Money and Credit - Reserve money (percentage change): 2018 22.5; 2019 19.1; 2020 -14.4; 2021 10.7 - M3 (Broad Money) (percentage change): 2018 8.2; 2019 12.1; 2020 23.6; 2021 2.8; 2022 12.0 - Credit to the economy (percentage change): 2018 -2.5; 2019 5.0; 2020 14.8; 2021 3.0; 2022 8.7 - Credit to the economy (percent of GDP): 2018 24.6; 2019 24.0; 2020 27.2; 2021 25.9 - External sector (percentage change) - Merchandise exports: 2018 10.0; 2019 -10.2; 2020 -23.1; 2021 55.5; 2022 20.1 - Merchandise exports, excluding megaprojects: 2018 20.2; 2019 8.3; 2020 -22.0; 2021 42.7; 2022 15.9 - Merchandise imports: 2018 18.1; 2019 9.5; 2020 -12.9; 2021 65.7 - Merchandise imports, excluding megaprojects: 2018 8.9; 2019 9.3; 2020 -4.5; 2021 37.9; 2022 7.8 - External current account, after grants (percent of GDP): 2018 -30.3; 2019 -19.1; 2020 -27.6; 2021 -22.4; 2022 -44.9 - Net international reserves (millions of U.S. dollars, end of period): 2018 2,885; 2019 3,605; 2020 3,493; 2021 2,927; 2022 2,400 - Gross international reserves (millions of U.S. dollars, end of period): 2018 3,081; 2019 3,884; 2020 4,070; 2021 3,470; 2022 3,076 *Press Release No. 22/145; May 9, 2022. IMF Communications Department.* --- ## References - [Republic of Mozambique and the IMF](http://www.imf.org/external/country/MOZ/index.htm) - [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance) - [Special Drawing Rights (SDRs) -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/special-drawing-rights-sdr) - [Press Releases](https://www.imf.org/en/news/searchnews) - [PRESS CENTER](http://presscenter.imf.org/) - [https://www.imf.org/en/home](https://www.imf.org/en/home) _Source: https://www.imf.org/en/news/articles/2022/05/09/pr22145-mozambique-article-iv-consultation-and-ecf_