In view of this new wave of spread of the new coronavirus pandemic that increases the uncertainties about the future, with increasingly visible impacts on the business sector, the Confederation of Business Associations of Mozambique (CTA) says it is urgent to adopt new measures to stimulate and support the business sector.
Of the various measures, CTA wants the introduction or worsening of any fees and taxes to be halted, because even in a highly challenging context like this one, there has been a great appetite from the Government, particularly at the level of Municipalities, to introduce or worsen taxes and/or fees that increase the suffocation of the business sector.
Speaking at a press conference ahead of the Government’s decisions for the upcoming State of Public Calamity, CTA Vice President Prakash Prehlad noted that despite the challenges that lie ahead due to this adverse framework, the business sector has been trying to survive the negative impacts of this crisis by maintaining its activity and safeguarding jobs.
“Therefore, in order to enhance this effort and avoid the collapse of the business sector and the economy in general, we advocate that all intentions to introduce or increase taxes and/or fees during the crisis period should be immediately halted, thus increasing the tax burden, which already seems quite heavy for national companies, particularly for Small and Medium Enterprises,” said the businessman.
The private sector also advocates restructuring the foreign currency financing line
In another development, Prehlad proposed extending, adapting and broadening the scope of the electricity cost reduction measure for a period of 12 months and restructuring it so that it is more comprehensive, including, in addition to Small and Medium Enterprises, businesses of all sizes in the critical sectors most affected by the pandemic, such as hotels and restaurants, commerce and agriculture.
The CTA also demands the payment of the State’s debts to the companies. Specifically, it wants the government to speed up the settlement of debts with companies, including debts for the supply of goods and services and the reimbursement of Value Added Tax (VAT), in order to capitalize them, thus avoiding a collapse of the business fabric. Another alternative would be to securitize these debts and allow securities to be used to pay taxes and other obligations with the State.
The private sector also defends the restructuring of the financing line in foreign currency (the USD 500 million line), because, according to Prehlad, since the introduction of this line of financing (in the second half of 2020), it is noted that commercial banks have practically not used it, due essentially to the fact that it is a commercial line with an unreasonable interest rate, of around 7%.
In CTA’s view, for this line to be effectively used by the commercial banks, which will then pass the effect on to the real economy, it needs to be restructured in such a way that the 500 million USD are transacted in the Interbank Foreign Exchange Market (ICM), through a direct sale operation to the commercial banks.
Finally, the vice president of CTA stresses that, with this stance, it will be possible to limit the strong currency depreciation that has been characterizing the Mozambican economy, increasing the supply of foreign currency in the market, thus minimizing excess demand.
