Mozambique assures IMF that buying Cahora Bassa does not affect financial stability

13 February 2006

Washington, USA, 13 Feb – Mozambique has assured the International Monetary Fund (IMF) that acquiring a majority stake in the Cahora Bassa Hydroelectric Dam (HCB) will not affect the country’s financial stability, the IMF says in its latest report.

In the report, published at the end of last week in Washington, the IMF says that, “the methods for financing this large and complex transaction are still being worked on, including the assistance of the World Bank.”

However, “the Mozambican authorities have assured the IMF that the types of funding will be compatible with the (macro-economic stability) program and will be discussed with the staff at the next review.”

Portugal and Mozambique are currently negotiating the final terms of transfer of control of the dam, after having signed a memorandum of understanding at the end of last year, which said control would be handed over to Mozambique, which will end up with a share of around 80 percent.

In its Mozambique report, the IMF advised the authorities to implement measures to take maximum advantage of large projects such as HCB and the Mozal aluminum factory for the country’s development.

In the long term the IMF forecasts that, “job creation, the spread of technology and vertical and horizontal integration with the domestic economy should increase significantly,” provided the suggested measures are implemented.(macauhub)