The Planning and Budget Committee of the Portuguese Parliament defended yesterday, Monday, that the sovereign wealth fund from the mega-projects revenues should be adequate to the governance priorities, warning that the initiative is not a "magic wand"..

"Mega-project revenues should not be seen as a magic wand for solving the structural and institutional problems of our countries. We have to look at our realities and see the priorities of the governance programs," said António Nequice, chairman of the parliament's Planning and Budget Committee.

The deputy was speaking during the opening of the meeting of the IV High Level Working Group of the Parliamentary Budget Committees of the Portuguese Speaking African Countries (PALOP), which is taking place since yesterday in Maputo.

For António Nequice, cited by Lusa, the adoption of the sovereign fund should be associated with the priorities of the governance programs of each state, ensuring that the funds from the exploration of mineral resources are applied in the real needs of the countries.

"Based on international best practices, we have to see to what extent sovereign wealth funds can help us make a quantitative and qualitative leap in the growth and development we are aiming for," he stressed.

The Bank of Mozambique is in the process of preparing a technical proposal for a future sovereign wealth fund, to be supported by revenues from natural resources, mainly natural gas.

The proposal to create a sovereign wealth fund for Mozambique based on revenues from natural resources should be approved by the end of the year, the Minister of Economy and Finance, Max Tonela, announced in July.

The Bank of Mozambique and non-governmental organizations (NGOs) have advocated as an ideal scenario that the sovereign wealth fund be established before the country starts receiving revenues from the Rovuma, in time to create technical and institutional capacity in natural resource management.

The mechanism will also rely on revenues from reserves of coal, heavy sands, titanium and other high value ores exported by Mozambique.

The creation proposal drafted by the central bank and released in 2020 foresees two objectives, "accumulate savings" and "contribute to the country's fiscal stabilization," with transparency and accountability rules.

The Bank of Mozambique's proposal expects the country to raise $96 billion over the life of the Rovuma gas, almost seven times the current annual Gross Domestic Product (GDP), but major exploration projects are still stalled due to insecurity in Cabo Delgado province.

Of the three approved projects, the one on the high seas, led by oil company Eni, was advanced, corresponding to a production of 3.4 mtpa (million tons per year) of liquefied natural gas, 11% of the total that was planned (the total included another 13.12 mtpa in the Area 1 project in Afungi and another 15 mtpa in the Mamba extension of Area 4).

The meeting of the Parliamentary Budget Committees of the PALOP countries runs until Wednesday and, in addition to officials and parliamentarians from the Portuguese-speaking African countries, will be attended by the resident representative of the United Nations Development Programme in Mozambique, Narjess Saidane, and the political advisor to the European Union delegation in Mozambique, Stefan Simosas.