The southern African nation of Mozambique is set to receive US$470 million over the next three years, as part of a financing package agreed to by the International Monetary Fund (IMF) this week.

The new IMF deal, under its Extended Credit Facility program, marks the first time the IMF has agreed to extend significant financing to Mozambique since 2016, when the nation became mired in debt following a $2 billion corruption scandal linked to “hidden loans” involving Credit Suisse and Russia’s VTB Capital.

The country went into default in 2017, delaying an LNG project in Cabo Delgado that has since been disrupted by years of conflict in the northern Mozambique province. The scandal led to the arrests of nearly two dozen key officials, including former finance minister Manuel Chang and close associates of former president Armando Guebuza.

The IMF extended a controversial US$118 million loan to Mozambique in the wake of devastating Cyclone Idai, but both the IMF and World Bank had stepped back from any dealings with Maputo because of the scandal.

IMF officials who visited the country last week said final approval of the deal should come in the next few weeks.

“In recent years the Mozambican economy has been hit by a series of severe shocks that risk intensifying vulnerabilities and worsening socioeconomic conditions,” said Alvaro Piris, who led the IMF mission.

He cited the conflict in Cabo Delgado and delay of the LNG project, as well as climate and COVID risks, as impacts but noted that Mozambique has positioned itself for a steady economic recovery.

Image: IMF file photo