On 8 January 2024 the IMF issued a report after completing the Third Review under the Extended Credit Facility (ECF) Arrangement with Mozambique. The ECF arrangement aims to support structural reforms to promote Mozambique’s economic recovery and bring about higher and more inclusive growth.

The IMF report notes that parliamentary approval of the Sovereign Wealth Fund bill in December 2023 was an important step toward ensuring transparent and sound management of natural resource wealth. The IMF considers that continued fiscal consolidation efforts are necessary to reduce financing needs. The report notes that the economic recovery is accelerating, supported by the liquified natural gas projects amid modest non-mining growth. The inflationary pressures have declined and the outlook is positive, but there are still significant risks relating to adverse climate events and the security situation.

Owing to the high debt and tight financing conditions, the IMF considers that continued fiscal consolidation efforts are necessary. In relation to revenue, the report notes that the value added tax (VAT) base should be broadened to help mobilize revenues efficiently. As regards government spending, wage bill reform can help create fiscal space for high-priority spending.

The IMF report notes that progress has continued across the governance and fiscal structural agenda, including approval of the Sovereign Wealth Fund Law; and progress on the recommended actions of the 2021 Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) Mutual Evaluation Report. Key reform policy priorities include revenue administration, public financial management, and state owned enterprises, to put fiscal policy on a stronger footing. The IMF considers that further capacity development is essential for strengthening institutional capacity and achieving development objectives.