The International Monetary Fund has extended a line of credit to Mozambique, the first not related to Covid, since pulling the plug on a $2bn hidden debt scandal six years ago.
After months of talks, the IMF has reached a three-year Extended Credit Facility agreement with Mozambican authorities, to the tune of $470 million, it said in a statement.
The deal, still subject to IMF management and executive board approval, “will support government reforms that address long-term structural challenges in public resource management and governance,” it 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 experienced since independence from Portugal four decades ago.
The government contracted secret loans worth 2,000 million dollars (1,800 million euros) in 2013 and 2014 from international banks to buy a tuna fleet and surveillance boats.
Maputo hid the 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 found that $500 million had been siphoned off and has yet to be accounted for.
In 2020, the IMF approved emergency financial support of $309 million to help Mozambique meet its fiscal needs and for urgent balance of payments problems in the face of the Covid pandemic.
In light of the history of state corruption, observers are concerned that not all funds are used for their intended purposes.
“Given the time of the elections that is beginning…although it is said that the money is to improve good governance, the reality is that there is going to be a big party,” said Adriano Nuvunga, president of the Mozambique Budget Monitoring Forum, suggesting that money is at risk. being diverted.
“The funds will not reach the people. We don’t see any appetite for reforms from the government,” Nuvunga told AFP.