The private sector advocates restructuring the $500 million funding line into domestic currency, which would allow it to be traded on the Interbank Foreign Exchange Market (ICM) through a direct sale operation to commercial banks.
Since its introduction in the second half of 2020, commercial banks have never used the financing due to the fact that it is a commercial line with an unreasonable interest rate of around 7%.
According to the Confederation of Mozambique Economic Associations (CTA), for this line to be effectively used by commercial banking, which will subsequently pass the effect on to the real economy, it needs to be restructured.
According to the CTA, with this measure it will be possible to limit the strong currency depreciation that has been occurring, increasing the supply of national currency in the market, thus minimizing the impact of excess demand.
The Bank of Mozambique announced last year the availability of a credit line of 500 million dollars for the financial system to guard against the negative impacts of the new coronavirus on the economy.
At the time, the Central Bank informed that the credit would be in place for a period of nine months.
The Bank of Mozambique stresses that it will continue to monitor the economic-financial indicators and the macroeconomic impacts of Covid-19 and will take additional corrective measures whenever necessary.
During the past year, the domestic business sector has experienced revenue losses estimated at $1.1 billion due to the negative impact of the new coronavirus pandemic, about 38.3 percent of total losses because of reduced business operating time.
Due to the limitations on companies’ operating time resulting from the measures that required them to adopt a labor mass turnover regime, companies lost about 885 hours of perfect operation, which, in turn, resulted in the loss of about $422 million in turnover.
The other 61.7% of the volume of lost revenue was due to the significant drop in aggregate demand, falling general price levels, and other factors.
Also due to the pandemic, some 40,000 jobs were lost and 1075 companies went out of business.
The year 2021 began with the emergence of a new wave of the spread of the covid-19 pandemic, which led the government to enact new restrictive measures.
These measures, coupled with continued currency depreciation, rising interest rates, the effect of natural calamities, and insecurity in some parts of the country, cause the outlook for business performance in the first quarter of this year to be revised downward.
