The governor of the Bank of Mozambique, Rogério Zandamela, lamented this Wednesday, 26 March, the decision by Standard & Poor’s (S&P) to partially downgrade the rating of domestic public debt issues, admitting impacts on access to credit in the country, the Lusa news agency reported .
‘This means that we are left with an almost speculative debt instrument. If it’s speculative, few investors will want to have it in their portfolio,’ said Rogério Zandamela, questioned by journalists at the end of the Monetary Policy Committee meeting in Maputo.
‘It undermines investor confidence. This has implications for access to external credit for families, companies and the state,’ he added, emphasising the possibility of some investors wanting to “get rid” of the debt securities in which they have invested. In this sense, he argued that measures are needed to ‘in a reasonable period of time be able to raise the rating again’.
The financial rating agency Standard & Poor’s downgraded the country’s domestic public debt issues to ‘Partial Default’, due to delays in payments to creditors and changes to a debt issue, as reported by Lusa on Monday (24).
Finance Minister Carla Louveira also clarified today (26) that the domestic debt exchange auctions that have been held are provided for in the current public debt management strategy.
‘We have some BT (Treasury Bills) that were issued in the past, where their term was due to expire this year. It would be up to the government to decide whether to simply close them, pay them off or renew them. The strategy that is in place at the moment, until 2025, provides for what we call exchange auctions,’ said the minister, questioned by journalists on the sidelines of the start of the first parliamentary session in Maputo.
She insisted that the exchange auctions are part of the current debt management strategy (2022-2025), which will be reviewed by the new government, sworn in in January, for the period 2026 to 2029. ‘What we are doing in the current period is essentially what is already set out in the current strategy,’ he said, adding that other actions aimed at “rethinking debt sustainability will be part of this revised strategy, through an inclusive process with the financial system and the central bank”.
‘We are also working with our public debt consultants from the World Bank, the International Monetary Fund and other organisations that also provide support on matters relating to our country’s debt,’ said Carla Louveira.
