Sun. Apr 14th, 2024

Mozambique has finalised the necessary instruments to operationalise its Sovereign Wealth Fund this month, paving the way for revenues from lucrative gas projects to flow into the new investment vehicle, a government official told Reuters.

“In principle, everything is in place to meet the April timeline. We continue to target April, barring any hiccups that could occur during the formalisation processes,” said Enilde Sarmento, National Director of Development Studies and Policies at the Ministry of Economy and Finance.

Sarmento explained that two of the three main outstanding instruments required to launch the fund have now been finalised – the Management Agreement to be signed between the government and central bank governor, and the Investment Policy. The fund’s regulations were approved on 12 March.

“At this moment, we have the finalised Investment Policy and Management Agreement. We will now proceed to have them reviewed and approved, namely by the Council of Ministers, before the Management Agreement is signed between the government and the operational manager mandated to run the fund. After that, the fund can become operational,” Sarmento added.

In parallel, other processes are being wrapped up such as establishing two key bodies – the seven-member Investment Advisory Council, appointed by government; and the Supervision Committee comprising civil society members, nominated by parliament.

“We are working on these instruments and remain on track to have everything finalised by end-April,” said Sarmento.

Once approved by the Council of Ministers later this month, Finance Minister Max Tonela will be mandated to sign the Management Agreement with the Bank of Mozambique governor.

Mozambique’s parliament gave the green light in December to create the Sovereign Wealth Fund using revenues from the prolific offshore gas fields in the Rovuma Basin. By the 2040s, annual receipts from liquefied natural gas exports could peak at over $6 billion, according to official projections.

The International Monetary Fund previously described parliamentary approval of the Sovereign Wealth Fund as “an important step” towards ensuring transparent and robust management of Mozambique’s natural resource revenues.

With landmark LNG projects by consortiums led by TotalEnergies and ExxonMobil expected to transform Mozambique into a global LNG powerhouse in the coming decades, the Sovereign Wealth Fund will play a crucial role in prudently investing gas windfalls and funding sustainable development.

By Joy

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