IMF extends credit to Mozambique after debt scandal – Channels Television

The International Monetary Fund has extended a credit facility to Mozambique, the first unrelated to Covid, since it ended a $2 billion hidden debt scandal six years ago.

After months of talks, the IMF has reached a three-year extended credit facility agreement with the Mozambican authorities for up to $470 million, it said in a statement.

The agreement, still subject to IMF management and board approval, “will support government reforms aimed at addressing long-term structural challenges in public resource management and governance,” it said. he said in a statement.

It will also finance “sustainable and inclusive growth and long-term macroeconomic stability”.

Mozambique has yet to recover from a huge debt that triggered an economic crisis, the worst the country has seen since gaining independence from Portugal four decades ago.

The government took out secret loans worth $2 billion (€1.8 billion) in 2013 and 2014 from international banks to buy a tuna fishing fleet and surveillance vessels.

Maputo hid loans from parliament but the debt came to light in 2016, prompting donors including the IMF to turn off the tap on financial support.

An independent audit later revealed that $500 million had been misappropriated and remained untraceable.

In 2020, the IMF approved $309 million in emergency financial support to help Mozambique meet its fiscal needs and for urgent balance of payments issues in the face of the Covid pandemic.

In light of the state’s history of corruption, observers worry that not all the funds are being used for the intended purpose.

“Given the time of the elections which is starting, … even if it is said that the money is intended to improve good governance, the reality is that there is going to be a big party,” said Adriano Nuvunga, President of the Mozambique Fiscal Watch Forum, suggesting financial risks. being diverted.

“The funds will not reach the people. We see no appetite for reforms from the government,” Nuvunga told AFP.