Mozambique reports on impact of COVID funds


Last March the IMF and Mozambique announced they’ve reached a staff-level agreement on a US $470M facility marking the fund’s much-anticipated return to the country.

At the same time, a set of measures were presented in line with the upcoming new program including the approval of a sovereign wealth fund legislation, fiscal & governance reforms, and the publication of a report on the management of funds the country received from donors as part of its COVID emergency response.

In line with the announcements, the Ministry of Finance has published today (document in Portuguese) a report showing that at the beginning of the pandemic, the country forecasted a total need of US$700M in order to mitigate the effects of the crisis. The document refers to US$386,5M in funds deployed in the 2020 fiscal year received from the IMF, the AfDB, the European Union, the US government, the Islamic Bank, and the Global Fund. The report highlighted education, health, and social services as the most pressing economic sectors and indicated them as a government priority for the application of resources distributed the investments as follows:

  • In the education sector, the creation of infrastructure to guarantee social distancing, restriction, and redistribution of classes including night school, the introduction of new digital methodologies broadcasting classes (including online, radio and tv), the temporary closure of some schools implied greater intervention to adapt existing infrastructures to the new reality dictating greater pressure on the yearly budget for the production of teaching materials, equipping classrooms, construction of toilets and water supply infrastructure to ensure proper hygienic conditions;
  • In the Health sector, it provided conditions for adequate infrastructure such as the creation of specific health units for the care, monitoring, and hospitalization of infected patients, as well as the acquisition of medical equipment, training & qualification of medical personnel, and the hiring of specialists;
  • In the Social sector, restrictive measures were implemented in order to improve the protection of the most vulnerable families, expanding the number of people assisted by the national social security services; and
  • In the economic sector, the creation of a fund to assist small and medium-sized companies directly affected by the crisis requires financing to mitigate losses.

Also Read: UK Judges disagree on financing Mozambique’s gas megaproject

Given the unprecedented circumstances at the time with no previously set international protocol, the report shows that the government response assessment also included the attribution of funds to essential public works including water infrastructure, energy, agriculture, strategic state-operated companies, and treasure support to municipalities.

Interestingly, the report also acknowledges the challenges faced implementing the funds, including a description of imparities – a move that combined with an action plan at the end of the report already being implemented to remediate the findings, is a sign that the country is moving towards the transparency and governance standards preached by the IMF and other donors.

In anticipation of the official announcement of the IMF’s new program expected sometime in the next several weeks, there have been many signs in the international markets that Mozambique may be poised to return to the economic stability that saw the country become one of the fastest-growing economies in the region. More notably, Moody’s recent change to a positive outlook on the economy and comments by Minister Max Tonela like the AfDB inclination to resume budget support in 2023, the creation of the country’s sovereign wealth fund this year anticipating the beginning of ENI’s FLNG operations next summer.

This article was first published by Further Africa

FurtherAfrica is an online platform centralising news and content on the development and growth story of Africa. Content Syndication is done in partnership with The Exchange. The platform focuses on Southern Africa with an interest in economic growth, investment opportunities, financials and everything else in between.

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