Mozambique Needs to Ready for Gas Boom Revenue, IMF SaysTom Bowker
Mozambique should strengthen its management of public finances as it prepares for high growth and revenue associated with an expected natural-resources boom, the International Monetary Fund said.
“While substantial natural resource revenues are six to 10 years away, efforts are needed to put in place adequate institutional arrangements and capacity to address the large new challenges associated with this sector and the promise it holds for the country,” Doris Ross, head of the IMF mission visiting Mozambique, said in a statement yesterday at the end of a two-week stay in the southeast African country.
The International Energy Agency in September estimated fiscal revenues associated with the development of gas fields off northern Mozambique at $115 billion over the next 25 years. That compares with GDP last year of $15 billion, according to World Bank figures. The IEA Africa Energy Outlook report projects the first exports of liquefied natural gas in “the early 2020s.”
The ruling Front for the Liberation of Mozambique won parliamentary and presidential elections last month. Filipe Nyusi, a former defense minister, was chosen to lead a country where 54.7 percent of the population lives below the poverty line, according to the World Bank’s latest figures, from 2009.
The IMF team encouraged the Mozambican authorities to focus on rural infrastructure development. That, along with an improved business environment, “should help make growth more inclusive by enhancing agricultural productivity and job creation in the private sector,” the IMF said.
The IEA has said Mozambique aims to increase its electrification rate to 85 percent from 39 percent currently by 2035.
Mozambique should “step up implementation of key structural reforms, especially in the public financial management area,” the IMF’s Ross said. Authorities in the country are “appropriately committed to further strengthening their management of public resources, including by adopting a fiscal rule to improve the management of windfall revenue,” and are “enhancing the transparency and efficiency of public investment.”
The IMF statement called for the management of public enterprises to be strengthened and for audited annual reports to be disclosed for the largest public companies. It singled out the Mozambican Tuna Co., or Ematum, for particular mention.
It emerged last year that an $850 million bond issue by Ematum to buy more tuna fishing boats was also used to finance anti-pirate patrol boats, a development that surprised some participants in the transaction.