IMF recommends reform of the Mozambican fuel import and subsidies system

23 February 2016

The International Monetary Fund (IMF) recommended to Mozambique it should carry out a reform of the fuel import and subsidies system, in a report issued recently in Washington.

The IMF, while acknowledging that the bill for fuel paid by the State had shrunk as a result of the recent fall in oil prices in international markets, said that the current system was costly, inefficient and was misdirected.

The report went on to say that in May 2015 the government had to securitise about US$100 million (0.7 percent of GDP) of debt due to fuel distributors to pay part of the accrued subsidies in 2014 due in large part to inefficiencies in the import system.

The cost of importing fuel to Mozambique, said the IMF, was higher than for most countries in the region due to a number of inefficiencies in the import system, especially since April 2014.

Also according to the IMF, measures that could help improve the system include granting permission to oil product distributors and major natural resource companies to import fuel and raise financing directly, according to market needs. (macauhub/MZ)