Mozambique: Internal borrowing on the rise – Standard Bank

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Mozambique: Internal borrowing on the rise – Standard Bank

3:32 CAT | 19 Aug 2019

File photo: Lusa

Standard Bank’s Economic Studies Unit predicts that Mozambique will increase its use of domestic debt to compensate for its move away from international markets, foreseeing fiscal consolidation in the country only from 2020.

“Following the negative impact of the cyclones and given the possibility that the October election costs could slip, we only see a return to fiscal consolidation next year and, as a result, resorting to domestic debt is likely to continue to rise,” the Unit’s analysts write.

In its August report on African financial markets for clients, to which Lusa has had access, the Standard Bank division states that: “in the last years, since the disclosure of the hidden debts in April 2016, the Government has controlled the budget deficit through a set of measures which includes tax collection improvements and expenditure cuts, including the end of subsidies.”

For Standard Bank analysts, the fact that inflation and the outlook for the national currency have improved “could lead to more aggressive cuts of the interest rate” which fell to 12.75% in August.

On a political level, Standard Bank considers the peace process to be “irreversible” and states that the prospects for a “peaceful” election in October have improved with the peace agreement signed between the government and Renamo earlier this month.

Source: Lusa