{
  "title": "IMF Executive Board Completes Fourth Review under Extended Credit Facility and concludes 2024 Article IV Consultation with Mozambique",
  "publication": "IMF News, July 8, 2024",
  "sourceUrl": "https://www.imf.org/en/news/articles/2024/07/08/pr24263-mozambique-imf-exec-board-completes-4th-rev-ecf-2024-art-iv-consult",
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  "summary": "The IMF Executive Board completed the Fourth Review under the Extended Credit Facility (ECF) Arrangement, providing Mozambique with immediate access about US$60.03 million.",
  "publishDate": "2024-07-08",
  "sections": [
    {
      "heading": "Program decision and financing",
      "content": "- The Executive Board completed the Fourth Review under the Extended Credit Facility (ECF) Arrangement and approved immediate disbursement of SDR 45.44 million (about US$60.03 million), usable for budget support.\n- Total disbursements under the ECF arrangement to date: SDR 249.92 million (about US$330.14 million).\n- The three-year ECF arrangement aims to support Mozambique’s economic recovery, reduce public debt and financing vulnerabilities, and foster higher and more inclusive growth through structural reforms."
    },
    {
      "heading": "Program performance and waivers",
      "content": "- Structural benchmarks (SBs): Three of four SBs were met as of end-June 2024.\n- Quantitative performance criteria (QPCs): Two of four QPCs were observed.\n- Waivers approved by the Executive Board for two nonobservances:\n  - Waiver for nonobservance of the continuous performance criterion on non-accumulation of new public and publicly guaranteed external payment arrears — missed due to operational constraints related to debt management.\n  - Waiver for nonobservance of the performance criterion on the domestic primary balance — missed, in part, due to higher than expected wage-bill spending and debt service.\n- The Executive Board completed the financing assurances review and approved the authorities’ requests for modification of the MPCC and the quantitative performance criterion on domestic primary budget balance."
    },
    {
      "heading": "Macroeconomic outlook and policy stance",
      "content": "- Inflation: Continued to moderate and was within the Monetary Policy Consultation Clause (MPCC) band.\n- Growth: Economic growth is positive but expected to moderate, with tight financial conditions acting as a drag on activity.\n- Risks: Significant risks stem mainly from adverse climate events and the fragile security situation.\n- Monetary policy:\n  - A tight monetary policy stance has helped contain inflationary pressures and rebuild FX reserves.\n  - With weak non-mining growth, well-anchored inflation expectations, and continued fiscal consolidation, a gradual easing of the monetary policy stance is appropriate.\n  - Improving monetary policy transmission by deepening the interbank, money, and foreign exchange markets is important.\n  - Allowing greater exchange rate flexibility is necessary to enhance resilience to external shocks.\n- Fiscal policy:\n  - Further fiscal consolidation is warranted to reduce financing needs and contain debt vulnerabilities, while creating fiscal space for social spending to protect the most vulnerable.\n  - Revenue mobilization and wage bill spending rationalization are essential to create fiscal space for high-priority social and development spending.\n  - Improving social spending execution and avoiding future arrears remain paramount.\n- Other policy priorities:\n  - Further progress in enhancing the AML/CFT framework is warranted.\n  - Continued capacity development, including in the operation of the Sovereign Wealth Fund, is essential for strengthening institutional capacity.\n  - Measures to build resilience to climate change and accelerate progress on addressing gender-based disparities are crucial."
    },
    {
      "heading": "Structural and governance progress",
      "content": "- Notable reforms and steps:\n  - Publication of a Decree Law requiring the collection of beneficial ownership information.\n  - Publication of financial risk indicators of state-owned enterprises (SOEs).\n  - Monthly cash flow forecasts by Treasury to inform budget execution.\n- Emphasis on strengthening: revenue administration, public financial management, debt management, and SOE operations.\n- Continued capacity development needed for effective Sovereign Wealth Fund operation and broader institutional strengthening."
    },
    {
      "heading": "Discussion priorities from the 2024 Article IV Consultation",
      "content": "- Wage bill rationalization for a sustainable and cost-effective provision of public services.\n- The role of state-owned enterprises (SOEs) and policies to improve their governance and transparency.\n- Drivers of exchange rate stability since mid-2021."
    },
    {
      "heading": "Republic of Mozambique: Selected Economic Indicators, 2020–24",
      "content": "National income and prices\n- Nominal GDP (MT billion): 989 (2020); 1,058 (2021); 1,206 (2022); 1,339 (2023); 1,425 (2024 Proj.)\n- Real GDP growth (percentage change): -1.2 (2020); 2.4 (2021); 4.4 (2022); 5.4 (2023); 4.3 (2024 Proj.)\n- Consumer price index (percentage change, end of period): 7.3 (2020); 10.9 (2021); 3.6 (2022); (blank for 2023 in source); (blank for 2024 in source)\n\nGovernment Operations (percent of GDP)\n- Total revenue: 23.8 (2020); 25.1 (2021); 23.7 (2022); 24.5 (2023); 25.6 (2024 Proj.)\n- Total expenditure and net lending: 32.2 (2020); 30.8 (2021); 32.8 (2022); 33.2 (2023); 32.9 (2024 Proj.)\n- Overall balance, after grants: -4.8 (2020); -4.6 (2021); -5.3 (2022); -4.3 (2023); -3.7 (2024 Proj.)\n- Primary Balance after grants: -1.9 (2020); -5.2 (2021); -0.3 (2022); -0.1 (2023); (blank for 2024 in source)\n- Public sector debt: 120.0 (2020); 104.3 (2021); 100.3 (2022); 93.9 (2023); 97.5 (2024 Proj.)\n  - of which: external: 97.3 (2020); 80.8 (2021); 72.1 (2022); 66.4 (2023); 65.9 (2024 Proj.)\n\nMoney and Credit\n- Reserve money (percentage change): 9.0 (2020); -14.3 (2021); 0.6 (2022); 117.8 (2023); -13.0 (2024 Proj.)\n- M3 (Broad Money) (percentage change): 23.3 (2020); 1.9 (2021); 8.7 (2022); 3.3 (2023); 4.0 (2024 Proj.)\n- Credit to the economy (percentage change): 13.1 (2020); 5.2 (2021); -2.2 (2022); -5.0 (2023); (blank for 2024 in source)\n- Credit to the economy (percent of GDP): 26.2 (2020); 25.8 (2021); 23.5 (2022); 20.7 (2023); 18.5 (2024 Proj.)\n\nExternal sector (percent of GDP)\n- Merchandise exports: 26.1 (2020); 35.3 (2021); 43.9 (2022); 39.5 (2023); 37.2 (2024 Proj.)\n  - excluding megaprojects: 8.5 (2020); 10.3 (2021); 11.2 (2022); 9.8 (2023); (blank for 2024 in source)\n- Merchandise imports: -41.3 (2020); -48.5 (2021); -70.6 (2022); -43.8 (2023); -45.6 (2024 Proj.)\n- External current account, after grants: -26.2 (2020); -20.5 (2021); -36.4 (2022); -11.6 (2023); -30.8 (2024 Proj.)\n- Net international reserves (millions of U.S. dollars, end of period): 3,493 (2020); 2,927 (2021); 2,333 (2022); 2,933 (2023); 2,821 (2024 Proj.)\n- Gross international reserves (millions of U.S. dollars, end of period): 4,070 (2020); 3,470 (2021); 2,888 (2022); 3,510 (2023); 3,508 (2024 Proj.)\n\nSource: IMF Executive Board press release, July 8, 2024.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Republic of Mozambique and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2024/07/08/pr24263-mozambique-imf-exec-board-completes-4th-rev-ecf-2024-art-iv-consult"
    }
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    "Published: July 8, 2024",
    "The Executive Board completed the Fourth Review under the Extended Credit Facility (ECF) Arrangement and approved immediate disbursement of SDR 45.44 million (about US$60.03 million), usable for budget support.",
    "Total disbursements under the ECF arrangement to date: SDR 249.92 million (about US$330.14 million).",
    "The three-year ECF arrangement aims to support Mozambique’s economic recovery, reduce public debt and financing vulnerabilities, and foster higher and more inclusive growth through structural reforms.",
    "Structural benchmarks (SBs): Three of four SBs were met as of end-June 2024.",
    "Quantitative performance criteria (QPCs): Two of four QPCs were observed.",
    "Waivers approved by the Executive Board for two nonobservances:",
    "The Executive Board completed the financing assurances review and approved the authorities’ requests for modification of the MPCC and the quantitative performance criterion on domestic primary budget balance.",
    "Inflation: Continued to moderate and was within the Monetary Policy Consultation Clause (MPCC) band.",
    "Growth: Economic growth is positive but expected to moderate, with tight financial conditions acting as a drag on activity.",
    "Risks: Significant risks stem mainly from adverse climate events and the fragile security situation.",
    "Monetary policy:",
    "Fiscal policy:",
    "Other policy priorities:",
    "Notable reforms and steps:",
    "Emphasis on strengthening: revenue administration, public financial management, debt management, and SOE operations.",
    "Continued capacity development needed for effective Sovereign Wealth Fund operation and broader institutional strengthening.",
    "Wage bill rationalization for a sustainable and cost-effective provision of public services.",
    "The role of state-owned enterprises (SOEs) and policies to improve their governance and transparency.",
    "Drivers of exchange rate stability since mid-2021.",
    "Nominal GDP (MT billion): 989 (2020); 1,058 (2021); 1,206 (2022); 1,339 (2023); 1,425 (2024 Proj.)",
    "Real GDP growth (percentage change): -1.2 (2020); 2.4 (2021); 4.4 (2022); 5.4 (2023); 4.3 (2024 Proj.)",
    "Consumer price index (percentage change, end of period): 7.3 (2020); 10.9 (2021); 3.6 (2022); (blank for 2023 in source); (blank for 2024 in source)",
    "Total revenue: 23.8 (2020); 25.1 (2021); 23.7 (2022); 24.5 (2023); 25.6 (2024 Proj.)",
    "Total expenditure and net lending: 32.2 (2020); 30.8 (2021); 32.8 (2022); 33.2 (2023); 32.9 (2024 Proj.)",
    "Overall balance, after grants: -4.8 (2020); -4.6 (2021); -5.3 (2022); -4.3 (2023); -3.7 (2024 Proj.)",
    "Primary Balance after grants: -1.9 (2020); -5.2 (2021); -0.3 (2022); -0.1 (2023); (blank for 2024 in source)",
    "Public sector debt: 120.0 (2020); 104.3 (2021); 100.3 (2022); 93.9 (2023); 97.5 (2024 Proj.)",
    "Reserve money (percentage change): 9.0 (2020); -14.3 (2021); 0.6 (2022); 117.8 (2023); -13.0 (2024 Proj.)",
    "M3 (Broad Money) (percentage change): 23.3 (2020); 1.9 (2021); 8.7 (2022); 3.3 (2023); 4.0 (2024 Proj.)",
    "Credit to the economy (percentage change): 13.1 (2020); 5.2 (2021); -2.2 (2022); -5.0 (2023); (blank for 2024 in source)",
    "Credit to the economy (percent of GDP): 26.2 (2020); 25.8 (2021); 23.5 (2022); 20.7 (2023); 18.5 (2024 Proj.)",
    "Merchandise exports: 26.1 (2020); 35.3 (2021); 43.9 (2022); 39.5 (2023); 37.2 (2024 Proj.)",
    "Merchandise imports: -41.3 (2020); -48.5 (2021); -70.6 (2022); -43.8 (2023); -45.6 (2024 Proj.)",
    "External current account, after grants: -26.2 (2020); -20.5 (2021); -36.4 (2022); -11.6 (2023); -30.8 (2024 Proj.)",
    "Net international reserves (millions of U.S. dollars, end of period): 3,493 (2020); 2,927 (2021); 2,333 (2022); 2,933 (2023); 2,821 (2024 Proj.)",
    "Gross international reserves (millions of U.S. dollars, end of period): 4,070 (2020); 3,470 (2021); 2,888 (2022); 3,510 (2023); 3,508 (2024 Proj.)",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[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)",
    "[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)"
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