Mozambique: Eleven state-controlled companies in the red

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Mozambique: Eleven state-controlled companies in the red

2:31 CAT | 29 May 2019

Maputo. [File photo: Lusa]

Most state-controlled public companies have reported negative results over the last three years. According to the National Directorate of Treasury, out of a total of 13 audited, only two showed positive results, namely Ports and Railways of Mozambique and Mozambique Post.

The Mozambican government is authorised to issue annual guarantees and endorsements to finance some operations within budgetary limits set by parliament, and the state business sector has been the largest beneficiary of guarantees and endorsements. This outlook represents a high fiscal risk for the state, according to the National Treasury Department.

“The trend of the last three years shows that 10 companies face liquidity constraints. The liquidity ratio illustrates the ability of a company to meet obligations with maturities of less than one year with its current assets,” the report on fiscal risks, to which STV has had access, reads.

Moreover, 10 out of the 13 companies report solvency ratios below 50%. That is, their equity covers less than half of their liabilities.

Reimbursement of retrocession agreements is another problem. Government accounts indicate that, in 2017, 3.1% of gross domestic product (GDP) in new retrocession agreements was disbursed, but only 0.6% of GDP was reimbursed.

According to the State General Account for 2017, the total value of the state’s loan portfolio was 11% of GDP, mostly concentrated in two companies, the now-extinct Maputo Sul, with 4% of GDP, and Mozambique Electricity (EDM), with 3% of GDP.

In 2017, EDM received 0.7% of GDP in additional loans, but made repayments of 0.3% of GDP. Maputo Sul received 1.7% of GDP, the Fund for Investment and Water Supply Heritage (FIPAG) absorbed 0.4%, and Aeroportos de Moçambique (ADM) received 0.3% of GDP, and did not refund any of that amount.

The state’s current portfolio of guarantees and endorsements is classified as high risk because there is a high probability that these loans are due to be activated this year.

By Edson Arante

Source: O País