Former Prime Minister, Luisa Diogo, warned on 12 May that the country must be prepared for a bout of austerity, in order to take advantage of the resumption of normal relations with the International Monetary Fund (IMF).
Speaking at a Maputo press conference, Diogo noted that the resumption of an IMF programme with Mozambique coincided with the Russian invasion of Ukraine, which was likely to cause painful measures such as increased fuel prices.
The new IMF programme sends a signal of confidence in Mozambique, but it is not cost-free. Diogo said one of the conditions for the IMF programme would be tighter management of the Mozambican economy.
She believed that the Mozambican government will now introduce reforms "that could be painful. We had better see that there are measures that are painful, but which bring results that are worthwhile".
The immediate problem Diogo foresaw was the supply of fuel. In Mozambique, fuel companies are demanding that the government increase the price of liquid fuels, otherwise they might stop importing fuel.
The country could not afford to run such a risk, she warned. "That would be the worst situation we could go through", she exclaimed.
"Often the government has to find ways of balancing things between consumers, distributors, and importers of this product that is so fundamental for the economy", said Diogo. Although another increase in fuel prices was inevitable, it must be explained to the public: "we must not tire of explaining", she said. "We must explain in parliament and explain through the mass media".
The country needed to find other sources of finance, and that meant debt - but this must be "responsible indebtedness", stressed Diogo. The first step would be to define a debt strategy, in which "we must forget commercial debt because we are not in any position to repay". Currently, "we are strangled by a terrible commercial debt, for which there is no debt forgiveness", she said. "If we wanted to go after commercial debt, then we wouldn't need the IMF", said the former Prime Minister. "Now we have to take on debt in accordance with our capacity to repay". The advantages of loans from the IMF and the World Bank are long repayment times and low interest rates".
