IMF board approves $456 million program for Mozambique

The International Monetary Fund on Tuesday granted a $456 million (€432 million) loan to Mozambique, the first since it withdrew six years ago at the time of the so-called “hidden debt” scandal involving the government. The outline of the agreement was announced in late March.
“These provisions will support the economic recovery and the measures put in place to reduce public debt and financial weaknesses,” the IMF said in a statement. “This program encourages the government’s ambitious reform plan,” it added.
In 2016, one of the country’s biggest corruption scandals had broken out in Mozambique: secret loans equivalent to nearly two billion euros had been granted by foreign banks to Mozambican state-owned companies and guaranteed by the state.
After these revelations, the IMF suspended its budgetary aid, followed by all international donors. Since then, the financial institution has only granted emergency aid, after Cyclone Idai in 2019 and in 2020 in the context of the coronavirus pandemic.
Deprived of international funding, Mozambique, a former Portuguese colony, defaulted on its debt and its currency, the metical, collapsed, causing the worst financial crisis since independence in 1975. A subsequent independent audit uncovered the embezzlement of $500 million (426 million euros), which remains unaccounted for.
Nineteen defendants are currently appearing before a special court in a high-security prison in Maputo. The former president of Mozambique, Armando Guebuza, has been called as a witness.