Africa-Press – Mozambique. The International Monetary Fund (IMF) representative in Mozambique said on Thursday that the domestic debt situation in the country was “somewhat complicated”, noting that it was issuing domestic debt to pay off external debt.
“We have a drop in external financing which now, both this year and next year, is and will be negative. In other words, it is necessary to issue domestic debt to pay the external debt. So, it is a somewhat difficult situation,” Alexis Meyer-Cirkel told the media on the sidelines of an IMF seminar entitled “Resilient Mozambique, Recent Milestones in the Development of Fiscal and Financial Capacity” in Maputo.
According to the IMF representative, the challenges of external debt not only affect Mozambique: countries in the Southern African region are facing the same dilemma, which results from the international situation.
“External financing has been decreasing not only in Mozambique, but in the region as a whole (…) This contributes very strongly to the need to enlist domestic banking resources to be able to finance the state budget,” he added.
The Mozambican state closed the first and third quarter with a public debt stock of 971,788 million meticais (€14,252 million), an increase of 5.1% compared to the end of 2022, according to official data.
“This worsening was largely influenced by the evolution of the internal debt, in a context of relative stabilisation of the external debt,” reads the report on the economic and social balance of the execution of the State Budget from January to September 2023, to which Lusa had access on Thursday.
In the document, the Ministry of Economy and Finance states that the external debt remained practically unchanged until September, at 643,491 million meticais (€9,434 million), while the internal debt grew 16%, compared to December, reaching 328,296 million meticais (€4,813 million) at the end of September.
“Measures are being implemented to reduce the cost of taking out new loans while improving existing loan portfolio management measures,” the report states.
It is added that the measures focus on “strengthening rigor in the selection and prioritization criteria of projects to be financed using concessional credits and maximizing the use of multilateral and bilateral financing windows in the form of donations”.
“When contracting internal financing, the Government has been prioritizing the extension of debt maturity and reduction of the interest rate in line with the current Public Debt Management strategy with the entry of institutional investors (Pension Funds and Insurance Companies),” it also says.
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