The 2024 Fiscal Risk Report highlights how public companies and their subsidiaries have successfully minimized the vulnerability of the Mozambican State to fiscal risks.
This significant achievement, as detailed in the report released by the Ministry of Economy and Finance, demonstrates the commendable efforts of the State Business Sector in reducing the State's exposure.
Notably, this success can be attributed to a substantial decrease in the sector's debt stock, which decreased from 22% of Gross Domestic Product (GDP) in 2021 to an impressive 4% in 2022.
According to AIM in December 2021, the debt of state-owned and state-invested companies exceeded 200 billion meticais and, in December 2022, it had fallen to less than 50 billion meticais.
“The risks are concentrated in companies that systematically present negative net results and those that present negative equity”, explains the document, adding that the direct exposure is related to guaranteed debt, such as Sovereign Guarantees, State Comfort Letters, Sovereign Letters , State Guarantees and Retrocession Agreements.
While in 2021, five companies presented major risks to the State's accounts), in 2022, only three companies – Linhas Aéreas de Moçambique (LAM), the public fuel company (PETROMOC) and the mobile telephone company TMCEL – presented a large asset size and a very high level of risk.
“These companies deserve greater attention from the State in 2023/2024, because they heavily expose public finances”, explains the document.
According to the Ministry of Economy and Finance, in 2022, retrocession contracts held by the State Business Sector fell from 5.4 % of GDP in 2021 to 4.8%. But they are still higher than those recorded in the period between 2013 and 2017, when they varied between 3.8 % and 4.4 % of GDP.
“In terms of composition, the total value of the portfolio in retrocession contracts is concentrated in three entities, namely: the electrical company, EDM (3.1 percent of GDP), the port and railway company, CFM (0.9 percent of cent) and the airport company, [Aeroportos de Moçambique] ADM (0.7 percent)”, the document reads.
