Aid for Mozambique on the way

The International Monetary Fund (IMF) could agree a new aid programme to Mozambique early next year if the government makes good on pledges to renegotiate loans with creditors and allows an independent debt audit, an IMF official said on Wednesday.

The IMF cancelled its funding this year after the emergence of more than $2 billion in loans that were not approved by parliament or disclosed publicly, sending the war-scarred southern African nation’s currency into freefall.

The metical has lost 40 percent of its value against the dollar since January, inflating the cost of servicing more than $11 billion of state debt. The government admitted last week that the situation was unsustainable, with the country’s debt to GDP ratio likely to hit 130 percent this year.

IMF resident representative Ari Aisen told an investor conference that he did not believe there was any more secret borrowing but said there were still many complications that could delay a resumption in multilateral lending.

Key to its re-engagement is a full international audit of the various foreign loans, the IMF has said.

“The government’s willingness to bring transparency to its debt … is building the conditions for the IMF to resume programme discussions,” Aisen said.

“We are hoping to resume talks soon. The discussions with creditors is the first step and also an international audit. In terms of a new programme, possibly by the first quarter next year. Realistically, it may not be before June.”

Finance Minister Adriano Maleiane earlier told the same conference that Mozambique, which is home to vast natural gas reserves, was committed to an international audit and a clean-up of state finances.

“It’s necessary that state reform and corruption can be faced so the natural resources can be used for what we need,” he said.

Maleiane also said that the government was pinning its longer-term hopes on huge revenue from development of its offshore gas fields. Italian energy giant Eni is expected to make the final investment decision on its involvement in the next few weeks.