The week brought important developments in Mozambique’s economic area, including the projected increase in domestic public debt, the presence of three Mozambican banks among the 100 largest in Africa, new supervisory measures imposed by the Bank of Mozambique and progress in the attempt to remove the country from the Financial Action Task Force’s (FATF) grey list. These developments highlight the growing focus of the government and the financial sector on strengthening economic stability and improving their international reputation.
Public Debt Expected to Increase Significantly
The Ministry of Economy and Finance (MEF) forecasts that Mozambique’s domestic debt service could reach 90.3 billion meticals (1.4 billion dollars) by 2025, representing around 65 per cent of total public debt service. According to the MEF’s fiscal risks report, the external debt will account for the remaining 35 per cent. Forecasts indicate that after 2025, domestic debt will begin to gradually decrease, accounting for 61 per cent in 2026, while external debt will increase to 39 per cent. In 2027, a more pronounced reversal is expected, with domestic debt falling to 43 per cent and external debt rising to 57 per cent.
The document warns of the growing risk of refinancing, given the concentration of domestic debt maturities in the short term. The high volume of Treasury Bonds maturing in 2025 could increase pressure on the public budget. However, the report also highlights a decrease in the ratio of total public debt to Gross Domestic Product (GDP), which fell from 81.8 per cent in 2022 to 76 per cent in 2023, reflecting a slight improvement.
Mozambican banks gain a foothold in the African Top 100
Three Mozambican banks were included in The Banker magazine’s prestigious Top 100 African Banks 2024 list. Standard Bank Moçambique, in 54th place, is the country’s highest-ranked bank, despite having fallen four places compared to the previous year. Millennium bim then rose to 56th place, having climbed five places, while Banco Comercial e de Investimentos (BCI) climbed six places to 63rd.
In terms of assets, BCI leads among Mozambican banks with 3.3 billion dollars, occupying 62nd place in Africa. Millennium bim follows with 3 billion dollars (67th place) and Standard Bank with 2.5 billion dollars (82nd place). In the profitability category, Millennium bim recorded profits of 160 million dollars, closely followed by BCI, with 157 million, and Standard Bank, which achieved 154 million dollars in pre-tax profits.
Banking Supervision Reinforced by the Bank of Mozambique
The Bank of Mozambique (BoM) announced this week the appointment of new resident inspectors for Standard Bank and Banco Comercial e de Investimentos (BCI), with the aim of strengthening supervision of the activities of these financial institutions. The move comes as part of the BoM’s strategy to guarantee the stability of the financial system and protect clients’ interests.
Adelina José Chilaúle and Cláudio Júlio Mangue, senior staff at the central bank, were appointed to supervise BCI and Standard Bank respectively. This decision completes the cycle of appointments for the country’s three largest banks, following the appointment of a resident inspector for Millennium bim in May 2024. The BoM emphasises that these banks remain solid and stable, despite the increased supervision.
Mozambique makes progress in its efforts to get off the FATF grey list
Mozambique continues to make progress in its attempt to get off the Financial Action Task Force (FATF) grey list, where it has been since October 2022. The Mozambican authorities expect a technical team from the FATF to visit the country later this year for an on-the-ground assessment, after the fifth assessment report is delivered, scheduled for 24 November 2024. This report is considered essential to demonstrate that Mozambique has implemented the remaining six measures recommended by the FATF.
The national coordinator of the Executive Committee for Policies to Prevent and Combat Money Laundering highlighted the support of partners such as the European Union, the World Bank and the Global Facility, which helped speed up the implementation of the necessary reforms. Success in this process could result in Mozambique being removed from the grey list, improving its international reputation and facilitating access to investment and funding.
Felisberto Ruco
