Mozambique: Budget envisages growth rate of 5.5 per cent
In file CoM
The fallacy that the government, for the third consecutive year, was able to finance the state budget without the help of international cooperation partners is partly revealed by internal public debt standing at 101 billion meticais in December 2017.
The main creditors of this debt, which in 2018 will cost the trillion 19 billion, are Millennium Bim, Banco Comercial e de Investimentos (BCI) and Standard Bank, but since last year, new investors have joined the Ponzi scheme of Mozambican state debt.
The Bank of Mozambique once again warned in its last press release of 2017 that “the level of internal public debt remains high. The latest data on the level of internal public debt show that it stood at 101,121 million meticais”, and that “… interventions in the form of treasury bills of different maturities have increased to 93,980 million meticais”.
In other words, the central bank confirms that, due to the lack of support from the cooperation partners, the government of Filipe Nyusi continued to finance the state budget using internal debt, fiscal revenues almost only going to pay wages, as the Minister of Economy Finance, Adriano Maleiane, admitted in the Assembly of the Republic.
“Every year we have to get about 115 (billions of meticais) in funding because our revenue can only finance operating expenses with only 40 (billions) for investment, so there is always a deficit of something like 85 billion that we have to go get,” the minister said during the presentation of the 2018 State Budget.
When Nyusi became president of Mozambique, internal public debt stood at 31 billion meticais, since then it has more than tripled.
Non-monetary financial institutions enter Mozambican state Ponzi pyramid scheme
And this spiral of internal indebtedness will not stop in 2018, the Nyusi executive planning to raise an additional 19.2 billion meticais using domestic lines of credit.
An amount very close to the 19.7 billion allocated in the state budget for the payment of interest on internal debt, and higher than any allocation foreseen for agriculture and rural development (13 billion meticais), thereby corroborating the thesis of economist Fernanda Massarongo Chivulele that, “… the bulk of the internal debt is for the amortization of past debt”.
“What happens is a kind of Ponzi scheme, where debt is paid off with new debt,” Chivulele told @Verdade, referencing the fraudulent pyramid scheme that bears the name of the Italian immigrant Charles Ponzi, in which high guaranteed interest on investment is paid for with money obtained from new entrants or with new investments from existing members.
@Verdade has revealed that the main creditors of the domestic debt treasury bills are the three commercial banks that dominate the Mozambican financial sector and that have generated billions in profits during the current financial crisis.
In fiscal year 2016, Millennium Bim reported profits of more than 4.4 billion meticais, Banco Comercial e de Investimentos more than 2 billion and Standard Bank, 2.3 billion.
The new participants in this Ponzi pyramid of the Mozambican state are the Financial Brokerage Companies, Brokerage Firms, Pension Fund Management Companies, Investment Fund Management Companies and Insurance Companies that since 2017 have also been able to buy Treasury Bills.
In addition, before the end of 2017, the Bank of Mozambique issued new Treasury Bills, at a type B auction, at a “competitive” rate only directed at these new participants of this Ponzi pyramid of the Mozambican State, which are the Non-Monetary Financial Institutions. The requests for information from @Verdade on the amount of this additional debt were not answered by the central bank.
Leave a Reply
Be the First to Comment!
You must be logged in to post a comment.
You must be logged in to post a comment.