Data from the Mozambique Stock Exchange (BVM) indicates that the state placed the equivalent of 52.6 million euros in the second issue of 2024 Treasury Bonds, with the interest rate rising to 19.5 per cent.
This is the second issue in the space of a week and, according to the BVM, which conducted the operation on Wednesday (17), the bids submitted by the Specialised Treasury Bond Operators represented an overall demand of 4.1 billion meticais (59.8 million euros), “with a demand to supply ratio of 102.8%”, with a minimum interest rate of 19.5% and a maximum of 23%, for a maturity of five years.
“According to the cut-off rate” defined for the operation, the value of this issue of Treasury Bonds 2024-2nd Series, whose interest rate rose from the previous ones to 19.5 per cent, was 3.6 billion meticais (52.6 million euros), for an amount initially requested of four billion meticais (58.2 million euros).
According to Lusa, in the first Treasury Bond issue of the year, through BVM and carried out on 10 January, the state placed two billion meticais (29.5 million euros) with a maturity of five years, for an amount initially required of 2.1 billion meticais (31.5 million euros), paying 18% interest, which was also higher than the previous ones, but with a demand of 123.61%.
The government forecasts a deficit in 2024 equivalent to 2.3 billion euros, 10.4 per cent of the Gross Domestic Product (GDP), an increase of almost 40 per cent compared to this year, which will be financed with new debt.
According to the documents supporting the Economic and Social Plan and State Budget (PESOE) for 2024, the government expects to collect more than 383.5 billion meticais (5.6 billion euros) in revenue, corresponding to 25 per cent of the estimated GDP and an increase of 7.5 per cent compared to the budget for 2023.
On the state spending side, the budget forecast for next year is more than 542.6 billion meticais (7.9 billion euros), equivalent to 35.3 per cent of GDP and an increase of 15 per cent compared to the budget for 2023.
The budget deficit forecast by the government for this year is more than 159.4 billion meticais (2.3 billion euros), an increase of 38.6 per cent compared to the estimate for 2023, where the figure is more than 115 billion meticais (1.6 billion euros). In 2022, the budget deficit was 142 billion meticais (two billion euros).
To finance the deficit, the government plans to resort to external donations, totalling more than 83.3 billion meticais (1.2 billion euros), external debt, to the tune of 29.4 billion meticais (432 million euros), and internal credit, in this case to the tune of 46.3 billion meticais (680 million euros).
In 2023, the government has budgeted 57.4 billion meticais (843.1 million euros) in external donations to cover the deficit, almost 20.9 billion meticais (307 million euros) in external debt and 36.6 billion meticais (536 million euros) in debt issuance, in this case 96% of which had been completed by the end of October.
The Mozambican government previously approved the so-called Public Debt Management Strategy 2023-2026, which guides debt options over the next few years and aims to “set limits for debt sustainability indicators in credit contraction”.
In terms of external debt, it plans to “prioritise financing in the form of donations” and “in the form of highly concessional loans for profitable projects”, while in terms of domestic debt, the priority will be to “prioritise the issue of long maturity treasury bonds”.
