Mozambique faces fight for credibility, new central banker says
Mozambique has a lot of work ahead to restore its reputation in international markets, newly installed central bank governor Rogerio Zandamela said.
The country’s economic crisis “requires giant effort of all of us, not only the central bank, the whole society requires hard work, enormous sacrifices in order to restore and regain our international credibility and at the same time recover the confidence in the Mozambican economy”, Zandamela told reporters late on Thursday 1 September in Maputo, hours after he took office.
Mozambique’s government revealed in April that it had more than US$1.4-billion in previously undisclosed debt, which led a group of international donors to suspend aid and demand an investigation into how loans were used.
As the country tries to address its financial difficulties, an IMF team is expected in Maputo from 22 September to review economic developments and offer advice, the fund said this week.
They’ll find a familiar face in Zandamela, who worked at the IMF for almost three decades. He takes over control of the central bank from Ernesto Gove, whose term ended in July after 10 years as governor.
IMF mission to Mozambique expected on 22 September
The IMF mission to assess economic and financial developments in Mozambique arrives on 22 September. According to a note sent to financial news agency
Bloomberg, the Fund team will be in the country for about a week to assess recent economic developments and advise the authorities on macro-economic policies.
The IMF staff will also assess monetary policy measures implemented by the Banco de Moçambique following the increase of inflation and the decrease of the level of foreign currency reserves.
The news of the IMF visit comes shortly after the outgoing representative of the Fund in Mozambique, Alex Segura, said that the government was rigorously implementing the macro-economic measures recommended by the institution in June, with the aim of restoring confidence following the disclosure of greater-than-expected public debt.
The macro-economic measures, he explained, refer to monetary and fiscal policy. Segura said he hopes the country will regain a privileged position on the African continent.
“I am hoping that the government is already taking appropriate measures at the level of the State Budget and inflation control and that these macro-economic measures are correct and create positive expectations, taking into account the recommendations left by the [IMF] mission in June, which are being implemented very strictly. In this matter, we are quite happy”, he said.
Segura, who ends a three-year stay in Mozambique, said that the country would rise up again in the medium-term and listed a number of measures that could help.
“I think the government is beginning to take some important measures. There was an amending budget adopted by parliament, and the Banco de Moçambique is taking steps to control inflation and the depreciation of the metical. On the other hand, investors are still interested in investing in Mozambique, a fact coupled with the huge potential of the country, with resources such as coal. This will bring in foreign exchange”, he said.
Mozambique names IMF Rogerio Zandamela as central bank governor
Mozambique appointed Rogerio Zandamela, a senior International Monterey Fund (IMF) official, as governor of the central bank, the presidency said in an e-mailed statement. He will replace Ernesto Gove, whose term ended last month after 10 years at the helm of the bank, according to an e-mailed statement from the office of President Filipe Nyusi on Wednesday 31 August.
Zandamela was most recently the fund’s head of mission for Somalia and Djibouti and he previously served as the IMF’s resident representative for Brazil, and head of mission for countries including Armenia, Malaysia, Peru and Zimbabwe. He worked at the Washington-based lender since 1988, according to the statement.
Mozambique is struggling with debt after a commodity slump reduced its export revenue and depreciation of the local currency boosted the cost of payments and imports. As the country tries to address its financial difficulties, an IMF team is expected in Maputo from 22 September to review recent economic developments and offer advice, the fund said on Tuesday.
According to Zitamar News, before he was replaced as central bank governor, Ernesto Gove had come under increasing pressure to explain his role in the scandal of the government-guaranteed debts taken out by fishing and security companies Ematum, Proindicus and Mozambique Asset Management (MAM), and was a key figure in the disastrous visit to the IMF’s headquarters in April this
year which culminated in the suspension of relations between the IMF and Mozambique. Gove said he knew nothing of the deals, worth US$2-billion in total. His denial stretched credibility but – if true – suggests he was asleep at the wheel of one of the governor’s main roles, monitoring the flow of foreign exchange in and out of the country.
Over the last year, the metical has halved in value against the US dollar thanks to a foreign exchange crisis after the government dipped into central bank reserves to make the first repayment on the Ematum loans. Annual inflation is around 20% versus a target of 5% per year, and the central bank’s lending rate is at a record high of 17.25%, leading to reports of widespread defaults in Mozambique’s private sector.
The move to replace Gove came during the bank’s winter recess – the Banco de Moçambique’s monetary policy committee does not meet in August – and Gove has been on holiday in Florida, a fact highlighted by Mozambique’s tabloid press which printed photos from his daughter’s Instagram account with the caption “Here are the dollars”.
Africa political risk consultancy EXX Africa recently predicted that Gove was in line for replacement, writing that he had “become a political liability over excessive spending on the bank’s Maputo offices and his own luxurious life”. EXX Africa also said Finance Minister Adriano Maleiane would be replaced soon.
The choice of Zandamela as Gove’s replacement appears calculated to appease the IMF, which will visit Mozambique this month.