Mozambique’s Council of Ministers recently approved legislation for the nation’s new sovereign wealth fund, marking a pivotal step in managing the anticipated earnings from its burgeoning natural gas exports, valued at around $91.7 billion.
This move aligns with Mozambique’s efforts to enhance governance and transparency, particularly crucial after facing financial scrutiny and international financing challenges since 2016.
The legislation, a key component of an economic reform program supported by the International Monetary Fund, aims to ensure accountability, transparency, and adherence to international best practices in managing natural resource revenues.
Under the new law, 40% of state revenues from liquefied natural gas exports will be allocated to the sovereign wealth fund for the initial 15 years, with the remainder directed to the national budget. Subsequently, funds will be evenly distributed between savings and annual expenditure.
To ensure effective oversight and accountability, the legislation mandates the establishment of a supervision committee comprising independent members, including representatives from civil society.
This committee will be tasked with monitoring the fund’s operations, managing revenues, and ensuring adherence to established protocols.
Furthermore, the legislation underscores the commitment to transparency by requiring the supervision committee to report directly to parliament and publish quarterly findings.
Mozambique’s entry into the LNG export market in 2022 marked a significant milestone, despite challenges such as delays in larger onshore export projects due to security concerns in the Cabo Delgado province.
The approval of the sovereign wealth fund legislation signals Mozambique’s determination to responsibly manage its natural resource wealth and promote economic stability and development.
