Maputo — The Executive Board of the International Monetary Fund (IMF)on Wednesday approved a loan of 176 million US dollars for Mozambique over the next year to counter the effects of the world economic crisis.
The money was granted under the IMF's Exogenous Shocks Facility. According to the IMF website, this facility is designed to provide policy support and financial assistance on concessional terms to eligible low-income countries facing temporary exogenous shocks. Mozambique can draw immediately on about 132 million dollars worth of these funds to help offset the deterioration of the country's balance of payments.
"Temporary exogenous shocks" is the IMF euphemism for the massive frauds committed by American and European banks that have brought the international financial system to near meltdown.
The IMF Board also approved its fourth review of the country's economic performance under the three-year Policy Support Instrument (PSI), which began in 2007. The PSI aims to support economic reform in Mozambique whilst helping to maintain macroeconomic stability as foreign aid is increased. It is designed to complement the government's Action Plan for the Reduction of Absolute Poverty (PARPA II).
The PSI is an instrument that does not lend money to countries, but provides policy advice, and represents an endorsement by the IMF of the recipient's economic policies. The IMF argues that this sends a positive signal to donors and markets.
After the Boa Takatoshi Kato rd meeting the IMF Deputy Managing Director. Takatoshi Kato, declared that "Mozambique continued with a strong macroeconomic performance in 2008. A flexible policy response to higher fuel and food import prices helped to mitigate the impact of internal and external shocks in a challenging external environment".
Kato added that "Mozambique's strong track record of prudent macroeconomic policy implementation has provided room for an easing of fiscal and monetary policy in the near-term while remaining within its prudent medium-term strategy. In this context, the authorities' commitment to expenditure restraint in the approach to elections is welcome".
The IMF loan is interest free for the first five years, followed by a rate of 0.5 percent per annum. It is to be repaid within ten years.
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We are offering all of this with a 12-month interest-free Credit Fund of US$20 million. If this is not enough, we can offer US$50 million