MAPUTO The International Monetary Fund (IMF) has approved a $176 million loan to Mozambique to help cushion the southern African country from the effects of the economic slowdown, the IMF said on Wednesday.
IMF representative Felix Fischer said the loan would be payable in 10 years, after an interest-free grace period of five years, followed by annual rate of 0.5 percent.

The IMF financing will help Mozambique offset the deterioration of its balance of payments, which has been undermined by the global economic downturn, Fischer told a press conference in Maputo.

The approval was made following a visit by the fund's executive board, which completed a review of Mozambique's economic performance under the three-year Policy Support Instrument (PSI) approved in June 2007.

Fischer said IMF continued to project a 4.3 percent growth for Mozambique in 2009. Mozambique's economy grew by around 6.5 percent in 2008.

A 4.3 percent real growth is strong if we consider that many countries have recession and are registering negative growth, he said.

The executive board's Managing Director Takatoshi Kato urged Mozambique to diversify its economy to become more competitive.

Intensified efforts to diversify the sources of growth and to accelerate structural reforms will boost Mozambique 's competitiveness and economic diversification, Kato said in a statement.

Mozambique