Good afternoon. The International Monetary Fund delegation arriving in Maputo today may begin negotiations over a new financial programme. Some optimists believe an agreement could emerge from this mission, but the visit is more likely to test whether the government and Fund are ready to negotiate seriously.
The previous $456m Extended Credit Facility, approved in May 2022, did not simply reach a successful conclusion. Four disbursements were made, but in April 2025 the government and IMF agreed to abandon the fifth and sixth reviews and begin designing a successor programme. Mozambique is therefore trying to rebuild a relationship that had stopped working.
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Since discussions in Washington and Paris earlier this year, Chapo’s government has tried to demonstrate that it accepts some IMF criticism. It has begun rescheduling debt, reducing the public wage bill, enforcing compulsory retirement more strictly, identifying ghost workers, improving fiscal disclosure and addressing problems at state-owned companies.
Those steps strengthen its case. But they also expose contradictions. Domestic banks have become reluctant to absorb still more government securities. There are indications —still requiring confirmation— that institutions such as INSS, EDM and other state companies are being encouraged to buy them instead. The argument for this approach is that it would return interest payments to the state rather than to commercial banks. State companies can also negotiate deposits with commercial banks at preferential rates. But if public companies are being used as buyers of last resort for state debt, the government is asking the IMF to support reforms of those same companies while drawing resources away from their core functions. EDM needs capital to maintain and expand electricity supply, not to finance the budget.
