Bank of Mozambique alarmed with the level of internal public debt

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Bank of Mozambique alarmed with the level of internal public debt

1:53 CAT | 27 Feb 2018

In file CoM

The governor of the Bank of Mozambique, Rogério Zandamela, said on Monday that the level of public debt in the country, and particularly the state’s increasing recourse to treasury bills for financing, was worrying.

“Clearly, internal public debt is increasing and when this happens, sustainability issues arise,” Zandamela told a press conference at the end of the Monetary Policy Committee (CPMO) meeting.

According to Zandamela, internal indebtedness increased from 98.497 million meticais (1,313 million Euros) in December 2017 to 104,797 million meticais (1,398 million Euros) in February.

“When the state uses domestic resources for finance like this, it means that money is being diverted from the private sector, which is oriented to productive activity,” said Zandamela.

The governor of the Bank of Mozambique said that only market reaction could signal whether the current volume of domestic debt was sustainable or not, given the level of risk that creditors perceive.

“The CPMO considers that the risks, including the fiscal, remain high, in addition to those resulting from the floods that devastated much of the country at the beginning of the year, requiring the proper calibration of policies oriented to macroeconomic stability,” he added.

Source: Sapo