Mozambique improves in MCC selection scorecards
File photo: Lusa
Mozambique’s net international reserves currently cover around seven months of import of goods and services.
But last week alone, Mozambique spent more than US$200 million on public debt servicing. This spending has reduced the volume of net international reserves in the country by almost US$70 million, according to the Mozambican newspaper O País, citing the most recent balance sheet of the Bank of Mozambique. Despite this, the institution says there is no cause for alarm.
Is Mozambique’s debt sustainable? We talked to Fernando Lima, a journalist for the weekly magazine Savana and a commentator on economic issues in Mozambique.
DW Africa: The country’s foreign exchange reserves are disappearing fast. Right?
Fernando Lima (FL): According to the Bank of Mozambique, not so much. That is, they acknowledge that there was a decline, but on the other hand, they say that reserves remain solid, with coverage for seven months, which corresponds to international standards. But these numbers also have to be better explained, because Mozambique has external debt it is not paying and the value of our debt – both external and domestic, and especially domestic – is moving to unsustainable levels.
DW Africa: Does this mean that there are fewer and fewer investors available to buy Mozambican debt securities?
FL: In fact, commercial banks have been reluctant to buy treasury bonds.
DW Africa: And who will pay for the financial crisis? Are citizens vulnerable to raising taxes and prices on essential goods such as bread or fuel?
FL: For the moment, Mozambican consumers are under enormous pressure in face of a series of small increases the treasury is imposing, in particular the increase of many public service tariffs. You have certainly been following the Gabinfo (Mozambican Information Office) attempt to increase their fees or create new media fees. I am citing this as an example of the stratagem the government is using. But there are other examples, notably border services, conservatory and notary services, etc., where prices have risen astronomically, not to mention also the adjustments for some goods and services, such as fuels.
DW Africa: Does this all happen by imposition of the International Monetary Fund (IMF)?
FL: Let us say that the government is acceding to some IMF suggestions. On the other hand, the IMF is pleased because this then shows tangible results, at least at the level of the numbers, and on the other hand, is somehow lowers the pressure in relation to the famous case of the ‘hidden debts’ and the lack of any explanation in the report concerning these same debts – which, in the IMF’s opinion, has many shortcomings.
DW Africa: Is the payment of salaries to civil servants in the coming months assured?
FL: It is essential that the government keeps paying civil servants their salaries, because the government counts on these officials to vote for Frelimo, either in October in the local elections or later in the general elections next year.
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