By Daniel Itai.
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Maputo, Mozambique. (News of The South) – Mozambique is set to benefit from the International Monetary Fund (IMF)'s US$309 million Rapid Credit Facility (RCF).
“Mozambique is expected to be significantly affected by the COVID-19 pandemic, dashing prospects of a nascent economic recovery following two powerful tropical cyclones that struck in 2019. The IMF’s emergency financial support under the Rapid Credit Facility, along with the additional donor grant financing it will help to catalyze, will contribute to addressing Mozambique’s urgent balance of payments needs generated by the pandemic.
The authorities’ immediate priority is to limit the impact of the pandemic and preserve macroeconomic and financial stability. Higher health spending and measures to protect the most vulnerable in the society and support micro-businesses and SMEs are being enacted.
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. 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,” said IMF’s deputy managing director,Tao Zhang.
The COVID-19 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.
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