May 27, 2016

Q1. What is the current status of the IMF's engagement with Mozambique?

  • The IMF has a Policy Support Instrument (PSI) and a Standby Credit Facility (SCF) of about US$283 million in place with Mozambique.

  • In April 2016, the Mozambican authorities confirmed the existence of a large amount of borrowing that had not previously been disclosed to the IMF. The undisclosed borrowing amounts to US$1.4 billion (about 10.4 percent of GDP).

  • A mission that was scheduled to review Mozambique's arrangements in April was cancelled, pending a full disclosure and assessment of the facts.

  • The programs have not been cancelled; and the SCF is still legally in effect through June 2017.

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Q2. What are the next steps?

  • We have been working very closely with the Mozambican authorities to ascertain the facts regarding this borrowing. We have advised the authorities that any undisclosed debt-related transactions, irrespective of their purpose, need to be reported transparently and publicly.

  • Staff has welcomed the authorities' extensive disclosure of information, which constitutes an important first step toward full restoration of trust and confidence.

  • Looking ahead, the Fund and Mozambique will continue to work together constructively to evaluate the macroeconomic implications of this disclosure of information and identify steps to consolidate financial stability, debt sustainability and enhance governance and oversight of public enterprises.

  • The Fund's Mozambique team will conduct a staff visit to Maputo in June to continue the fact-finding process linked to the previously undisclosed borrowing and to assess the macroeconomic situation.

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Q3. What is the impact of the new borrowing revelations on Mozambique's outlook?

  • As indicated by Antoinette. Sayeh, Director of the IMF's African department in her April 15 press briefing: "The undisclosed borrowing [...] significantly changes our assessment of Mozambique's macroeconomic outlook." In particular, in the short term, Mozambique's fiscal position is adversely affected by the higher debt service costs generated by the recently disclosed borrowing and by the suspension of direct budget support by most donors. The 6.0 percent growth we projected for 2016 now appears optimistic given the debt revelations and the impact of adverse weather conditions in the South and North of the country. It is our hope that our June fact finding mission will help us assess the country's economic outlook.

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