Mozambique: Debt-to-GDP ratio must fall from 113% to 60% by 2025

Login

Register

http://www.clubofmozambique.com/

Mozambique: Debt-to-GDP ratio must fall from 113% to 60% by 2025

3:01 CAT | 31 Mar 2022

Photo: CTA on Facebook

The Minister of Economy and Finance, Max Tonela, says that the government is implementing a program to reduce public debt from the current 113% of gross domestic product (GDP) to 60% in three years.

Minister Tonela, who was speaking on the sidelines of the Annual Private Sector Conference (CASP), said that the executive was making projections with a view to getting the debt trajectory back on track by 2025.

“Our perspective is to work and find solutions so that the government can reduce the pressure that debt exerts on public finances and find solutions to equilibrate the public accounts, in order for us to have levels of revenue and expenditure which allow the state to create balances to inject in the economy via public investment,” the minister explained.

Regarding the sale of Vale Moçambique’s assets in coal and its logistics, Max Tonela says that there are already estimates of added value to be included. “The Tax Authority projections I have indicate an added value in the order of US$32 million,” he said.

Regarding the technical agreement reached between the government and the International Monetary Fund (IMF) for the US$470 million in financing recently approved by the Fund’s technical mission, Minister Tonela mentioned an associated zero-interest loan.

The IMF agreement recently approved by the executive recommends wage bill reform to reduce pressure on public finances. Max Tonela explained exactly what the government intends to do.

“The fact is that, in the current scenario and the previous one, due to the existence of numerous indexes and subsidies, the state has been having difficulty predicting the evolution of costs. If, for example, a 5% increase in base salary was agreed, indexing factors might result in an increase in costs of 10%. If various allowances are aggregated into salaries, we can start to have a forecast. Any incremental rate that the government decides on will be controlled,” the minister explained.

ALSO READ: IMF staff reaches staff-level agreement on an extended credit facility arrangement with Mozambique – Unabridged

Regarding the state’s debt to the national business community, Minister Tonela said he did not have the exact current figure, but promised, without specifying any particular deadline, that work was underway for payments to be made, taking the country’s socio-economic situation into account.

Source: O País