18. May 2009

Mozambique in talks with World Bank, IMF on loans

Mozambique is negotiating a $120 million loan with the World Bank and the International Monetary Fund for balance of payments support, independent newspaper O Pais reported on Monday.

"We are negotiating with the International Monetary Fund and the World Bank, we believe that these institutions will provide us with funding," Planning and Development Minister Aiuba Cuereneia was quoted as saying.

"An initial assessment by the government of the immediate needs for funding the balance of payments of Mozambique estimates that $120 million is the amount needed to ensure the stability of macroeconomic indicators," he said.

Mozambique's mining sector has been hit by the global financial crisis, reducing commodity exports. Economic growth is also expected to slow in 2009.

"In our case, we had to lower projections for GDP growth, as a result of the direct impact of slowed demand for Mozambique's main exports, specifically aluminium, cotton, cashews and sea products," Cuereneia said.

Mozambique's economy expanded by an average 8.5 percent between 2000 and 2007 but growth eased 6.2 percent in 2008, as a result of flooding in some areas and drought in others.

The IMF has predicted growth this year of 4.3 percent.

Almost 55 percent of Mozambique's state budget is provided by group of 19 donor countries and institutions, known as Programme Aid Partners (PAP). (Reporting by Charles Mangwiro; Editing by Andy Bruce, REUTERS)

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