Africa-Press – Mozambique. Mozambique’s government has finalised all the instruments needed to set up the Mozambique Sovereign Fund this month, an official source told Lusa on Tuesday. The fund will be financed with revenues from gas exploration projects.
“Everything is in place to fulfil the April timing. We continue with the April horizon, barring any mishaps that may occur from the point of view of formalisation processes,” said Enilde Sarmento, national director of Development Studies and Policies at the Ministry of Economy and Finance.
She explained that two of the three main instruments needed to operationalise the Mozambique Sovereign Fund have already been “finalised”: the Management Agreement, which will be signed by the government and the governor of the central bank, and the Investment Policy, as well as the fund’s regulations, which were completed and approved on 12 March.
“At the moment, we have the Investment Policy and the Management Agreement finalised. We’re now going to proceed to the forums for appraisal and approval. We’re talking about the cabinet, to then be followed by the signing of the management agreement by the government and the operational manager, who has the mandate to manage the fund, and then the fund will start to be operational,” added Enilde Sarmento.
At the same time, explained the Mozambique Sovereign Fund’s national director of Development Studies and Policies, other processes are being finalised, such as the setting up of two committees: the Investment Advisory Board, whose seven members will be appointed by the government, and the Supervisory Committee, which has members from civil society and is the responsibility of parliament.
“We’re working on these instruments, and we still have our sights set on having all this finalised by the end of April,” he said.
Once the Management Agreement has been approved by the cabinet, “later this month”, the minister of economy and finance, Max Tonela, will be given a mandate to sign it with the governor of the Bank of Mozambique.
“In principle, during this month, the instruments will have been finalised,” he concluded, adding that the gas resources “started coming in last year”.
On 15 December 2023, parliament approved the creation of the Mozambique Sovereign Fund with revenues from natural gas exploration, which should reach $6 billion (€5.5 billion) a year by the 2040s.
“Projections indicate that annual gas exports could amount to around $91.7 billion [€83.7 billion] nominally over the life cycle of the project, in a scenario where all the development initiatives approved so far by the government are in operation. In this scenario, annual revenues for the state will peak in the 2040s at more than $6 billion a year,” Minister Max Tonela explained at the time.
On 12 March, the government estimated that the Mozambique Sovereign Fund would be operational by April, following the approval of its regulations that day, as stated by the deputy minister of economy and finance, Amílcar Paia Tivane.
“It also defines the procedures for ensuring the transfer of resources associated with the exploitation of liquefied natural gas and revenues from the exploitation of future oil and gas projects, setting the proportion at 60% for the State Budget and 40% for the Sovereign Fund account for the first 15 years. And from the 16th year onwards, in a ratio of 50/50,” explained Amílcar Paia Tivane.
The International Monetary Fund (IMF) previously considered parliament’s approval of Mozambique’s Sovereign Fund to be “an important step” in guaranteeing “transparent and solid management” of natural resources.
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