Mozambique is seeking to restore direct budget support from the World Bank as part of efforts to strengthen public finances and stabilise its economy, Finance Minister Carla Louveira said on Tuesday, as the country hosted simultaneous missions from the World Bank and the International Monetary Fund (IMF).
The southern African nation is aiming to unlock a new phase of financial cooperation with international lenders nearly a decade after direct budget support was suspended following the country’s hidden debt scandal, which shook investor confidence and triggered a prolonged economic crisis.
Speaking in Maputo, Louveira said discussions with the World Bank were focused on reactivating a Development Policy Operation, a form of direct budget financing that would support government reforms and economic management.
She said the programme would become operational once Mozambique meets agreed conditions relating to macroeconomic stability, debt sustainability and financial integrity, in close coordination with the IMF.
“This is a very close coordination we are having with the Bank,” Louveira told reporters.
According to the minister, the issue was personally raised by President Daniel Chapo during a recent visit to Washington, underscoring the government’s determination to secure additional financial support as it grapples with mounting economic challenges.
The discussions coincide with a visit by an IMF staff mission led by Mission Chief Pablo Lopez Murphy, which is in Mozambique from June 8 to June 12.
In a statement, the IMF said the mission would assess recent economic developments and discuss the authorities’ plans to address fiscal and debt sustainability.
“The objective of the visit is to take stock of recent economic developments, discuss the authorities’ plans to address fiscal and debt sustainability, and explore how the Fund can best support Mozambique going forward,” the Fund said.
The IMF team’s presence highlights growing international engagement with Mozambique at a time when the country is facing pressure from both domestic and external economic shocks.
The Fund and the World Bank have worked closely with Mozambique in recent years to strengthen economic governance and restore confidence following the revelation in 2016 of more than $2 billion in previously undisclosed government-backed loans.
The hidden debt scandal prompted donors and international financial institutions to suspend direct support to the state budget, contributing to a currency crisis, rising debt burdens and slower economic growth.
The current negotiations suggest progress in Mozambique’s efforts to rebuild credibility with international partners and regain access to broader forms of concessional financing.
The IMF mission overlaps with a visit by senior World Bank officials, who on Tuesday attended the signing of five financing agreements worth a combined US$450 million.
The agreements, signed at the Office of the Prime Minister in Maputo, will support programmes in social protection, agriculture, water and sanitation, education and skills development.
Officials said the funding was intended to help strengthen resilience and accelerate development in sectors considered critical for poverty reduction and long-term growth.
Mozambique has faced a series of challenges this year, including severe flooding linked to climate-related weather events and economic spillovers from the conflict in the Middle East, which have added pressure to public finances and economic activity.
Authorities say these challenges have increased the urgency of securing additional external support to protect vulnerable communities and sustain development programmes.
The US$450 million package forms part of a broader World Bank partnership framework valued at $10 billion.
Under the programme, approximately US$6 billion is earmarked for public sector initiatives, while $4 billion is expected to support private sector development and investment.
Mozambique’s government hopes that stronger cooperation with the World Bank and IMF will help reinforce economic reforms, improve fiscal management and attract greater investor confidence as the country seeks to accelerate growth and address persistent development needs.
The outcome of the ongoing discussions is likely to be closely watched by investors and development partners looking for signs of continued progress in Mozambique’s economic recovery and reform agenda.
