Mozambique’s sovereign fund grows on fresh gas revenue injection

The value of Mozambique’s Sovereign Wealth Fund grew by almost 6% in its first month under central bank management, reaching US$116.41 million after a new capital injection, data compiled by Lusa shows. The government delivered on 10 December the first US$109.97 million of gas exploitation revenues to the Bank of Mozambique for the capitalisation and launch of the Sovereign Wealth Fund. According to an update from the Bank of Mozambique, by the end of the day on 6 January the Sovereign Wealth Fund’s market value had risen to US$116.41 million, up from US$110.18 million at the close of December, largely as a result of a US$6.159 million government capital injection on the same day.

The central bank had previously explained that the fund “is a portfolio of financial assets, managed in accordance with the principles, rules and procedures established in the law,” and that its creation – approved by parliament at the end of 2023 – was “motivated by the imperative need to ensure that revenues generated from oil and gas exploitation drive the country’s social and economic development.” “Maximising the benefits for the national economy and ensuring that these revenues serve as a stabilisation pillar for the State Budget, as well as a solid base for saving and wealth accumulation for future generations,” the central bank added, acting as operational manager. The Sovereign Wealth Fund “is state-owned” and aims to “accumulate savings for future generations through the collection of revenues from oil and natural gas exploitation and the returns on related investments,” as well as “stabilise the State Budget in cases of revenue volatility from oil production.” The government is responsible for overall management of the fund, which “is operationally managed by the Bank of Mozambique in the international financial market,” in line with the investment policy and subject to internal and external audits. Oil and gas exploitation brought Mozambique US$67.64 million in revenues up to September, according to previous data from the Ministry of Finance.

Budget execution up to September shows that nine-month cumulative revenues include US$24.68 million from the Mining Production Tax and US$42.96 million from the Petroleum Profit component, representing the portion of oil produced exceeding the “cost oil” allocated to the Mozambican state. Under the legislation that created the fund, which will be funded with 40% of natural gas revenues, cumulative revenues from 2022 to 2024 amounted to US$164.99 million. Since 2022, total revenues of US$232.33 million have been deposited in the Petroleum and Gas Transitional Revenue account at the central bank. Parliament approved the creation of the fund on 15 December 2023 using natural gas revenues, which are expected to reach US$6,000 million annually by the 2040s.