IMF Estimates Mozambique’s Public Debt to Reach 97.5% of GDP, Calls for Fiscal Policy Strengthening

The International Monetary Fund (IMF) has estimated that Mozambique’s public debt will increase to 97.5% of GDP this year, prompting the organization to advocate for measures to strengthen the country’s fiscal policy. IMF Deputy Executive Director Bo Li emphasized the importance of efforts to enhance revenue administration, public financial management, debt management, and state-owned enterprise operations in order to improve fiscal policy.

In a recent statement, the IMF announced that it would disburse an additional $60 million in support to Mozambique under the assistance program. This brings the total disbursements to Mozambique to $330.14 million. The IMF also projected a 4.3% economic growth for Mozambique this year, with a rise in public debt to 97.5% of GDP.

Furthermore, the IMF expects inflation in Mozambique to decrease to 3.6% this year, down from 4.3% in 2023. Bo Li suggested that a carefully calibrated fiscal and monetary policy mix is crucial for maintaining macroeconomic stability in the country. He also highlighted the importance of improving monetary policy transmission and enhancing the Anti-Money Laundering and Combating the Financing of Terrorism framework in Mozambique.

The IMF’s Extended Credit Facility program, approved in May 2022, provides total financing of $456 million to Mozambique. IMF Director General Kristalina Georgieva praised the country’s economic performance, noting that growth is rising, inflation is falling, and reserves are strong. She commended Mozambique for its strong institutions and good policies, which have contributed to its positive economic outlook.

Overall, the IMF’s support and recommendations aim to help Mozambique strengthen its fiscal policy, manage its public debt, and maintain macroeconomic stability in the face of external shocks.