(Ecofin Agency) - On July 8, 2024, the International Monetary Fund (IMF) approved a $60.03 million disbursement to Mozambique under the fourth review of the Extended Credit Facility (ECF) agreement.

Initially approved in May 2022, the program, totaling approximately $456 million, aims to support Mozambique’s efforts to restore macroeconomic stability, ensure debt sustainability, and foster stronger and more inclusive economic growth through various structural reforms.

The IMF noted mixed results in implementing the reform program. While three out of four structural benchmarks were met, only two out of four quantitative performance criteria were achieved.

Mozambique’s economic growth is projected to slow from 5.4% in 2023 to 4.3% this year due to restrictive financial conditions hampering economic activity, the IMF reported.

“While inflation pressures have declined, Mozambique faces significant risks, mainly from adverse climate events and the fragile security situation,” said Bo Li, IMF Deputy Managing Director.

Since 2017, Mozambique has been grappling with an Islamist insurgency in its gas-rich northern region. The economy took a further hit after Cyclone Freddy in 2023, causing significant damage and worsening food insecurity.

Beyond economic prospects, the IMF emphasized the need for Mozambique to continue fiscal consolidation given the country’s high debt and tight financing conditions.

“Revenue mobilization and wage bill spending rationalization are essential to create fiscal space for high-priority social and development spending,” Bo Li added.