The economic week in Mozambican President was marked by events of great importance, including the recent Financial Inclusion 2023 report, the increase in domestic public debt issues, the deepening of investigations into the hidden debt scandal and an analysis of the main difficulties that the new President, Daniel Chapo, will have to face in order to boost the country’s development.
Falling Credit and Rising Financial Inclusion
According to the Financial Inclusion 2023 report released by the Bank of Mozambique, credit to the economy fell by 9.6 per cent last year, a decrease attributed to adverse economic conditions and restrictive monetary policies.
The increase in interest rates and the decrease in demand for credit affected both companies and families, limiting available financing. In contrast, the Financial Inclusion Index grew by 1.14 points to 15.13, driven by the increase in non-bank agents and electronic money.
Expansion of Domestic Debt Increases Pressure on Public Finances
In the context of increased financing needs, the government raised 2.5 billion meticals (40 million dollars) in a new Treasury Bond issue, bringing the domestic public debt to 402.7 billion meticals by September.
This operation, carried out on the Mozambique Stock Exchange, obtained a demand rate of 68.03 per cent, and the Bank of Mozambique warned of the growing impact of domestic debt on financial sustainability, especially in the context of high interest rates, putting even more pressure on the public budget.
Hidden Debt Scandal: New Documents Revealed in Switzerland
Significant progress has been made in the case of Mozambique’s hidden debts, with the Swiss Attorney General’s Office receiving documents from Credit Suisse that point to serious flaws in the monitoring of suspicious transactions.
These documents include a transfer of 491.4 million meticals (7.8 million dollars) to the Ministry of Economy and Finance, without proper reporting of suspicious activity.
The investigations are intensifying in order to hold those involved accountable for this bribery and corruption scheme, which has been going on for almost a decade and has deeply affected Mozambique’s public finances.
The New President’s Challenges
Daniel Chapo, the newly elected Mozambican President, faces a series of economic and social challenges that require urgent structural reforms. These include the debt crisis, terrorism in the north of the country and the effects of climate change. Chapo inherits a shattered economy, with GDP falling to 1.8 per cent and 62 per cent of the population below the poverty line.
The economic crisis is intensified by debt and the need to strengthen infrastructure and security. Experts emphasise that the new president will have to implement innovative governance to combat corruption and foster sustainable development.
Text: Felisberto Ruco
