IMF debt repayment shows Mozambique wants to restore confidence – Minister

The Mozambican Finance Minister stated yesterday that the early full repayment of the 630 million euro debt to the IMF demonstrates a “capacity for prudent management” of commitments, proving to the markets that Mozambique intends to “restore confidence.” “By settling this obligation ahead of schedule, the Mozambican State demonstrates a capacity for prudent management of its external commitments, reinforcing its reputation as a credible partner in the international financial system,” said Carla Loveira in parliament, while answering questions from deputies. “This decision sends a clear message to the markets: Mozambique honors its commitments and is committed to restoring confidence in a global context that is increasingly demanding in terms of transparency and debt sustainability,” she added, emphasizing that it is an action that “produces concrete effects on the country’s risk perception.” “The reduction of exposure to the IMF is interpreted as a sign of strengthening the external position and greater autonomy in conducting economic policy, which tends to improve the sovereign risk profile. This reinforcement of credibility can translate, in the medium term, into better conditions for external financing, greater investor appetite, and a gradual reopening of access to international capital markets,” said Carla Loveira.

The Mozambican Ministry of Finance confirmed in April that it made a “full and early amortization” of 698,587,604 dollars (630 million euros) to the International Monetary Fund (IMF), settling financing contracted under the Poverty Reduction and Growth Trust (PRGT). In parliament yesterday, Carla Loveira specified that this payment was completed on March 23, settling the advances under the Rapid Credit Facility agreed in 2019, the Rapid Credit Facility agreed in 2020, and the Extended Credit Facility agreed in 2022. To do so, the Government used Net International Reserves (NIR), assets in foreign currency used to pay for imports.

“This decision is part of a broader strategy of macroeconomic normalization and strengthening institutional confidence. At a time when markets value consistent signs of commitment to structural reforms, the early debt repayment to the IMF contributes to repositioning Mozambique as an economy on a trajectory of stabilization and recovery,” the minister said. Carla Loveira added that it was “not just a financial act, but a strategic economic policy instrument, with a direct impact on external credibility, investment attraction, and the consolidation of macroeconomic stability.” Also in parliament, the minister explained that the IMF’s PRGT “is a window that provides concessional financing to countries like Mozambique that face fiscal and balance of payments pressures” and that under the agreements between the Bank of Mozambique and the Ministry of Finance for these facilities, the central bank “provided a guarantee” for these obligations, “resulting in a duplication of the record of this debt in the General State Account and the central bank’s balance sheet.” “Following the restricted financing conditions faced by Mozambique since late 2024, these agreements could have crystallized exposures on the Central Bank’s balance sheet.

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Additionally, the Mozambican State approved a Public Debt Management and Sustainability Strategy covering the period from 2025 to 2029. Under this strategy, there was a need to reduce the exposure of the Bank of Mozambique’s balance sheet, reducing pressure on external debt, which represents 40.81% of GDP until December 2025,” she detailed. Based on these assumptions, Carla Loveira said, the State “decided to reimburse the country’s obligations to the IMF, preserving the central bank’s balance sheet and thus its capacity to consolidate macroeconomic stability.” The operation was carried out one year after the IMF and the Mozambican Government suspended the program in force since 2022, announcing negotiations for a new program, which remains ongoing, according to the minister.

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