The International Monetary Fund (IMF) has approved a disbursement of $309 million to help Mozambique meet an urgent balance of payment and fiscal needs stemming from the coronavirus pandemic.

Last Thursday Mozambique lowered its forecast for economic growth this year to 2.2% from a previous forecast of 4% because of the impact of the virus, which has infected 65 people.

Its budget showed the southern African country, which was struck by two devastating cyclones last year, expects to record a deficit of more than 10% of gross domestic product in 2020.

“Mozambique is expected to be significantly affected by the COVID-19 pandemic, dashing prospects of a nascent economic recovery following two powerful tropical cyclones that struck in 2019.

“Given Mozambique’s limited fiscal space and high public debt, additional external support, preferably in the form of grants and highly concessional loans, is also urgently required to meet the country’s elevated financing needs and ease the financial burden of the pandemic,” IMF Deputy Managing Director and Chair Tao Zhang said in a statement.

The IMF’s emergency financial support is under the Rapid Credit Facility.

The Fund said significant disruptions are emerging in services, transport, agriculture, manufacturing and communications coupled with a much worse external environment affecting export-oriented sectors, such as mining.

To mitigate the impact of the pandemic and preserve macro-economic stability, the government has taken several steps to increase health spending, strengthen social protection to the most vulnerable and support micro-businesses and small and medium-sized enterprises, it added.

By Amaka E. Nliam