Mozambique's Sovereign Fund Management Agreement Gets Green Light

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The Government of Mozambique has officially approved the management agreement terms for the Sovereign Fund of Mozambique (FSM), marking a significant step in recognizing the Bank of Mozambique (BdM) as the operational manager of this fund, destined to handle revenues from natural resources.

The agreement, orchestrated by the Ministry of Economy and Finance, needed the approval from the Council of Ministers to move forward. Although the initial timeline aimed for the completion of the "key ideas" by the first quarter, the process extended beyond expectations.

This agreement delineates the terms under which the Government delegates its responsibilities to BdM for managing the FSM. While the law passed by the Assembly of the Republic broadly outlines the manager's roles, this contract delves into specifics regarding the administrator's mandate, functions, operational responsibilities, and investment policies.

Enilde Sarmento, the National Director of Economic Policies and Development at the Ministry of Economy and Finance, shared with "Notícias" that the contract would set standards for accountability, investment strategies, timelines, and the recruitment of internal managers. Both the Executive and the Assembly of the Republic have also recently approved the FSM's investment policy and appointed members to its Advisory Council.

Despite the management agreement not being fully signed, some funds have already been directed to the FSM's transitional account at BdM, which by June had accumulated 7,285.74 million meticais from oil and natural gas activities. This account plays a crucial role in building reserves from natural resource revenues, with a special emphasis on natural gas, anticipated to be a major economic driver.

Under the terms set, for the first 15 years, 60% of gas revenues will bolster the State Budget, with the remaining 40% being allocated to the Sovereign Fund.

Source: Noticias