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Mozambique Issues 3.4B Meticals In Treasury Bonds On the Stock Exchange

Mozambique Issues 3.4B Meticals In Treasury Bonds On the Stock Exchange

Mozambique placed this month, in a single operation through the Stock Exchange, 3.4 billion meticais in Treasury Bonds, valid for a maturity period of ten years.

According to information from the Mozambique Stock Exchange (BVM), the operation was carried out on the 13th, through a special session aimed at determining the results of the 2023 Treasury Bonds Issue – 5th Series.

The institution’s information adds that, according to the proposals submitted by the Specialised Treasury Bond Operators, the overall demand for the issue was 4.8 billion meticais, “with a demand and supply ratio of 161.67%, with a minimum rate of 16.000% and a maximum of 19.000%”.

The launch notice for this operation, dated 10 July, stated that an initially defined “maximum amount” of three billion meticais would be put up for subscription, with a fixed nominal interest rate of 17% and a maturity of ten years and five months, although with the possibility of increasing the amount to be raised if demand was higher.

The Mozambican government defined, in the documents supporting the 2023 State Budget (SB) law, the objective of “progressively increasing the use of higher maturity debt instruments in domestic financing”, with maturities of more than five years, “replacing Treasury Bills that are subject to high refinancing risk”.

“Emphasise that the mobilisation and dynamisation of domestic investors may enable an effective dispersion of securities, in addition to commercial banks, thus contributing to the containment and reduction of the degree of concentration of sovereign liabilities in the national banking system, which will mitigate the crowding-out effect resulting from the growing public indebtedness,” reads the documents supporting the State Budget law, consulted by Lusa.

The Government has included in the State Budget a forecast of total expenditure on Mozambique’s public debt in 2023 of 41.4 billion meticais, of which 29.9 billion meticais are related to the payment of internal interest and 11.4 billion meticais for the payment of interest on external indebtedness, corresponding to 2.3% and 0.9% of Gross Domestic Product (GDP), respectively.

According to estimates by the Mozambican Executive, the budget deficit for this year will stand at 115.5 billion meticais, corresponding to 8.7% of GDP, while the primary balance will amount to 41.2 billion meticais, or 3.1% of GDP.

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