The International Monetary Fund (IMF) announced Monday that it has reached an agreement with Mozambique to implement an Extended Fund Program until 2025, disbursing financial aid for the first time since the hidden debt scandal.

"The IMF team has reached a technical agreement with the authorities of Mozambique for a three-year program supported by a PFA in the amount of 470 million dollars," announced the leader of the IMF team in the country, Alvaro Piris, quoted by Lusa.

According to the IMF, the government's economic program supported by the PFA aims to enhance sustainability, inclusive growth, and long-term macroeconomic stability. However, this program is still subject to approval by the Fund's board of directors, which usually happens a few weeks after the announcement of the technical agreement.

This is the first time the Fund has financed Mozambique since the disclosure of the so-called hidden debt scandal in 2016, with only occasional financial aid following specific disasters, such as the covid-19 pandemic or cyclones Kenneth and Idai in 2019.

"In recent years Mozambique has been affected by a series of severe shocks that risk intensifying vulnerabilities and worsening socioeconomic conditions," the IMF said, pointing to the examples of the attacks in the north, which displaced more than 800,000 people and delayed the development of liquefied natural gas projects.

The program now announced intends to "focus on growth, fiscal sustainability and reforms in governance and public finance management, balancing financing with moderate adjustment that will rebuild fiscal space and reduce debt and financial vulnerabilities," the IMF added.

Among the reforms agreed upon in meetings already led by Adriano Maleiane as Prime Minister, the IMF highlighted "a number of tax and VAT policy reforms" and noted that "an important step will be the approval of a sovereign wealth fund," as well as the creation of a strong institutional framework for natural resource wealth management, initially focused on liquefied natural gas.

In the area of governance, the IMF stressed the need for the covid-19 audit report to be published and points out that "the program also deals with transparency in debt management and the natural resources sector, key areas identified in the 2019 Diagnostic Report on Transparency, Governance and Corruption prepared by the government with IMF support."