This week Mozambique placed 5,727 million meticais (82 million euros) in an internal stock market issue of Treasury Bonds with a maturity of five years, according to official data to which Lusa had access.
According to information from the Mozambique Stock Exchange (BVM), this operation took place on Monday and the bids submitted by the Specialized Treasury Bond Operators indicate that the demand and supply ratio was 89.54%, “having been allocated the total demand”.
This treasury bond issue, the 11th series of 2024, for direct subscription by the Specialized Operators, authorized the placement of up to 6,396 million meticais (91.6 million euros), with a fixed nominal interest rate of 14.70%.
The document also explains that this issue is part of the exchange of the 10th Treasury Bond issue of 2020. This month, the Bank of Mozambique acknowledged the high pressure caused by the state’s internal indebtedness, which has already grown by 90.3 billion meticais (1,269 million euros) in 2024.
“The pressure on domestic public debt remains high. Domestic public indebtedness, excluding loan and lease contracts and overdue liabilities, stands at 402.7 billion meticais” (5,659 million euros), said the information released after the regular meeting of the Monetary Policy Committee (CPMO) on September 30.
In the same information from the CPMO, a body that meets every two months, it is noted that the current level of domestic debt “represents an increase of 90.3 billion meticais compared to December 2023”.
The domestic public debt issued by Mozambique had reached 364,251 million meticais (5,117 million euros) in May, after growing by the equivalent of another 730 million euros in five months of 2024, according to previous data from the central bank.
In April, the Mozambican Ministry of Economy and Finance’s 2023 public debt report warned of the pace of growth in domestic debt, which, if it continues, threatens the process of reversing its unsustainability
As interest rates on Treasury Bills (BT, short maturities) and Treasury Operations (OT, longer maturities) “have risen, the cost of domestic financing has been driving a continuous upward adjustment of the weighted average interest rate on the government’s loan portfolio”.
The rate went from “5% in 2021 to 5.8% in 2022 and now 6.5% in 2023, amounting to a cumulative increase of 150 basis points in two years”, says the report, which also warns that the “refinancing risk, reflected in the growing concentration of maturities” of public debt “in the short term horizon, represents the greatest vulnerability”.
The accumulated domestic debt by December 31, 2023 amounted to the equivalent of 4,911.3 million dollars (4,616 million euros). The weight of BT issues in the total stock rose from 4% in 2019 to 9% in 2023, while that of OT doubled to 16% in the same period. (Lusa)
