Mozambique: Prime rate falls to 23.5%
Inflation in June was 19.72%, compared to June 2015, the Instituto Nacional de Estatistica (INE) reported on 8 July. Month on month inflation, June 2016 compared to May 2016, was 0.76%. One third of the inflation in June was a rise in food prices, including maize up 17.4% and cooking oil up 7.8%. Transport costs were also significantly up.
(Note that the data for individual cities on the INE home page (http://www.ine.gov.mz/) does not correspond to the data in the individual reports: http://www.ine.gov.mz/
All government payments to private companies have been stopped, at least until a new budget has been approved by parliament, said Luis Sitoe, Executive Director of CTA, the economic associations confederation. This adds to already serious problems caused by long delays by the government in paying companies for services. He also noted that the economic crisis has caused “a very large number of companies to close,” especially companies serving the gas and coal industry in Pemba, Nacala and Tete. (O Pais 12 July)
Tourism operators in Mozambique complain that Bank of Mozambique restrictions on transfers means that some airlines that do not fly from Maputo will not accept orders from Mozambique for flights starting in Johannesburg. (@Verdade 27 June)
Credit ratings agency Moody’s on 8 July cut Mozambique’s sovereign debt rating to Caa3. The firm warns of “government defaults beyond debt guarantees to other classes of debt under Moody’s definition, with potentially large losses for creditors.” It continues: “Moody’s expects that access to the IMF’s $283 million (2% of 2015 GDP) short-term credit facility will remain suspended and will not resume in the foreseeable future. Other aid support that had been suspended, including from the World Bank or the UK, are also unlikely to resume as a result. Corruption allegations too make the resumption of fund disbursement unlikely in the short run.” (Caa3 is not the lowest possible Moody’s ranking, but is considered as junk. Caa is “speculative of poor standing and are subject to very high credit risk,” and Caa3 is the lowest in the Caa category. Ca and C are lower still.)
African Arguments has published a good commentary on the crisis by Adriano Nuvunga (head of CIP) and Paolo de Renzio (International Budget Partnership): “Bankrupting Mozambique: From poster child to cautionary tale”http://africanarguments.org/
CIP has produced a video on the secret debts, called “Os mocambicanos exigem responsabilizacao dos culpados pela contraccao ilegal da divida”, posted on https://www.youtube.com/watch?
By: Joseph Hanlon
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