Africa-Press – Mozambique. The domestic public debt issued by Mozambique totalled 364,251 million meticais (€5.250 billion), after growing by the equivalent of almost €750 million in five months, according to data from the central bank.
According to the Economic Situation and Inflation Outlook report for May, to which Lusa had access on Monday, the domestic public debt contracted between December 2023 and May 2024, excluding that resulting from loan contracts, leases and overdue liabilities, ‘increased by around 51,910 million meticais’, equivalent to €748 million, by the end of May.
Overall, the debt issued domestically represented the equivalent of 23.7% of Mozambique’s Gross Domestic Product (GDP) on the same date, consisting mainly of Treasury Bills, with a stock on 28 May of 99,853 million meticais (€1.439 billion), and Treasury Bonds, which totalled 169,089 million meticais (€2.437 billion), as well as 95,309 million meticais (€1.374 billion) in advances at the Bank of Mozambique.
The report also adds that Mozambique’s international reserves ‘remain at comfortable levels’, reporting to May.
‘The country’s external position, measured by gross international reserves, remains at comfortable levels, with an accumulated balance of around $3.747 billion by 20 May 2024, enough to cover around five months of imports of goods and services, excluding major projects,’ it reads.
An April report by the Mozambican Ministry of Economy and Finance on public debt warns of the rate of growth of domestic debt, which, if it continues, threatens the process of reversing its unsustainability ‘in this generation’.
‘If domestic debt continues to grow at the current rate over the next five years, the breakdown of the “stock” could balance at 50 % domestic/50 % external by 2029, with a portfolio dominated by purely commercial instruments, a scenario that would jeopardise the chances of reversing the unsustainability of the debt in this generation,’ reads the 2023 public debt report, previously reported by Lusa.
It adds that, as interest rates on Treasury Bills (T-bills, short maturities) and Treasury Operations (longer maturities) ‘have increased, the cost of domestic financing has been driving a continuous upward adjustment in the weighted average interest rate of the government’s loan portfolio’.
The rate went from ‘5% in 2021 to 5.8% in 2022 and now 6.5% in 2023, totalling a cumulative increase of 150 basis points in two years’, the report says, which also warns that the ‘refinancing risk, reflected in the increasing concentration of maturities’ of public debt ‘in the short-term horizon, represents the greatest vulnerability’.
Mozambique’s domestic debt, accumulated until 31 December 2023, amounted to the equivalent of $4.911 billion ( €4.616 billion). The weight of BT issues in the total stock of Mozambican debt went from 4% in 2019 to 9% in 2023, while the weight of OT went from 8% to 16% in the same period, according to the same report.
‘In the last two years, the average time to maturity has fallen from 10 to eight years, which suggests that each year the average maturity of the government’s portfolio falls by one year. Just over a third of all debt matures within a year,’ the document warns.
‘In the current climate of pressure on the state treasury, this overloaded cycle of domestic debt maturities increases the risk of a scenario materialising over the course of the year in which the treatment of overdue instalments by commercial refinancing will be the only option available to the government,’ it added.
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