Mozambican domestic public debt continues to rise

Maputo, 4 Dec (AIM) – Mozambique’s domestic public debt increased by 59.3 billion meticais between December 2022 and November 2023, when it reached 334.4 billion meticais (5.2 billion dollars at the current exchange rate).

According to the Bank of Mozambique’s latest Economic Situation and Inflation Outlook Report, the government has been increasing domestic debt levels, which shows that the state is a strong competitor to the private sector in terms of access to credit.

“The cumulative amount of domestic credit contracted between December 2022 and November 2023 increased by around 59.3 billion meticais, giving a total domestic debt stock of around 334.4 billion meticais. Among the main instruments used to finance the cash deficit are Treasury Bonds and advances from the Bank of Mozambique”, reads the Central Bank’s economic outlook report.

In percentage terms, the domestic public debt increased by 21.5% from December 2022 to November 2023.

In the same period, the weight of the public debt rose from 23.6% of GDP in December 2022 to 25.3% of GDP in November 2023.

“In the short term, this scenario is expected to continue, given the limited collection of tax revenues and weak disbursement of external resources”, says central bank document.

“Overall, credit to the economy continues to shrink, as a result of the dynamics of consumption and private investment, characterized by an annual slowdown in credit to the economy granted by the banking system”, the report added.

However, the Bank of Mozambique claimed that the country’s international reserves remain at satisfactory levels, standing at 3.1 billion dollars on 15 November 2023, enough to cover around four months of imports of goods and services (excluding imports by the mega-projects).

The Central Bank also states that the outlook for single-digit inflation is maintained for the medium term, mainly reflecting the stability of the Metical and the impact of the measures being taken by the Monetary Policy Committee (CPMO).

(AIM)

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