Good afternoon. “Must try harder” seems to be the message from the school report that the International Monetary Fund (IMF) has issued to the Mozambican government. The fund finally issued a long-delayed statement from its executive board yesterday, three months after its staff visited Mozambique. There seems to have been anticipation in political circles that the IMF was going to agree to a new loan programme with the government. The latter has been asking for one for the past ten months, ever since the IMF’s previous loan deal with Mozambique was terminated. That was essentially because the government was not able to meet the requirements attached to that loan. Yesterday’s statement, however, suggests that the IMF has not really changed its mind in ten months. It still does not think that the government is showing willingness to make economic reforms which it says are necessary. Not that the IMF’s report contained any overtly critical language, but the fact that no loan programme has been agreed, together with the long list of problems that was related, speaks for itself.
The problems listed by the IMF are familiar. Public sector debt is growing, and it is harder and harder to repay. Day-to-day public spending is not covered by revenue, and the deficit is too high. External borrowing is hard to come by, and domestic borrowing is getting harder too, since defaults on repaying domestic debt in the last year have made banks reluctant to buy more of it. Economic growth outside the mining sector is weak. The country is vulnerable to climate shocks, as the recent floods have shown. There continues to be a shortage of foreign currency, which makes it hard for businesses to pay for imports, whether of stock or equipment.
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The closest the IMF came to criticising the government seems to be the line: “They [the IMF board] underscored the urgency of formulating a comprehensive policy reform package to entrench macroeconomic stability and lay the foundation for stronger and more durable growth. A clear communication of reform objectives would be critical to secure stakeholder buy‑in and help build public trust.” That suggests that the government is not communicating reforms clearly enough, in the IMF’s view.
