Mozambique: State business sector debt grew 4% in Q3 2024 – finance ministry

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Mozambique: State business sector debt grew 4% in Q3 2024 – finance ministry

12:37 CAT | 23 Jan 2025

File photo: Lusa

The debt directly contracted by Mozambique’s state business sector (SEE) grew by 4% in three months, totalling 39,695 million meticais (€600 million) at the end of the third quarter of 2024.

According to a report by the Ministry of Finance, the growth “is mainly due to the increase in the stock of direct domestic debt by 6.83%”, with external debt stagnating.

At the end of the second quarter, the debt of public companies and companies in which the Mozambican state has a stake amounted to 38,171 million meticais (€577 million), having grown by 1,524 million meticais (€23 million) in three months.

The report also justifies the growth in total debt, especially domestic debt, “largely due to the contracting of new loans by CFM [Caminhos de Ferro de Moçambique] and Emose [state insurance company], as well as the accumulation of arrears”.

The weight of the state business sector in Mozambique’s gross domestic product (GDP) grew by 0.4 percentage points in three years, accounting for 3.2% of the Mozambican economy at the end of 2023, according to an official report.

“The SEE is a source of revenue for the state, through the payment of taxes and dividends. On the other hand, the state can also support the operational activities of these companies, through current transfers,” explains a government report on fiscal risks for 2025.

According to the document, from the Ministry of Economy and Finance, the contribution of the SEE “has improved, reflecting an increase from 2.8% of GDP in 2020 to 3.2% of GDP in 2023”.

This growth, the document highlights, is “partly” the result of the recovery of the economy after the Covid-19 pandemic. Taxes were the largest source of contributions from the SEE, totalling around 20 billion meticais (€302 million) per year.

Dividends paid by the SEE reached 8.9 billion meticais (€134 million) in 2023, an increase of 14% compared to 2022, with the report highlighting that the public companies and companies in which the Mozambican state has a stake that contributed the most last year were the Cahora Bassa Hydroelectric Plant, with 4.6 billion meticais (€69.5 million), and the Mozambique Railways (CFM), with 1.8 billion meticais (€27 million).

Meanwhile, subsidies to the SEE from the state’s social component fell by around 1.2 billion meticais (€18.1 million) in 2023, compared to the previous year, these amounts mainly going to Eletricidade de Moçambique (EDM), Rádio Moçambique, Televisão de Moçambique and Linhas Aéreas de Moçambique.

“These subsidies represented, overall, the equivalent of 0.14% of GDP,” the document concludes.

Source: Lusa