Private credit to the state reaches 4.7 billion dollars by 2023 - CTA

Crédito privado ao Estado atinge 4,7 mil milhões de dólares em 2023 – CTA

Private credit to the Mozambican state amounts to 4.7 billion dollars, which makes up around 29% of the national business community's contribution to the Gross Domestic Product (GDP), the President of the Confederation of Economic Associations (CTA), Agostinho Vuma, revealed today in Maputo.

"If we add up the accumulated value, and overdue invoices, to around 400 million US dollars, the stock of credit to the state is estimated at around 4.7 billion dollars, plus the amount owed to gas stations, so the private sector finances our Mozambican state to the tune of around 29% of GDP [Gross Domestic Product]. So you can imagine what that means for the fabric of mostly SMEs, which is yearning for growth," he noted.

In order to ease the burden on private companies, the national business community is proposing the inclusion of a specific item for the payment of overdue invoices to suppliers of goods and services in the State Budget for next year, 2024. "Even if only partially".

"'It's [the lack of this item] that then prevents payment and, on the other hand, accumulates the state's debt to the private sector," said Vuma.

Speaking at the opening of the Economic Briefing 2023, he said that one of the reasons for the weak growth of the Business Robustness Index, in the order of one percentage point, from 28% to 29% in the third quarter of the year, was due to the accumulation of state debt to the private sector.

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"This means that most of our small and medium-sized enterprises are financing the state, limiting their growth," he clarified.

The representative of the Mozambican business community reiterated his proposal to the President of the Republic to establish a ceiling on the state's indebtedness to the private sector. The idea is to help the state limit the growth of backlogs and discipline the state's accounts.

"This would provide predictability of a reasonable economic position so that we have a private sector that is more attentive to all the situations that affect the performance of companies," he said.

Vuma considered that the state's private sector partners should respect the SISTAFE LAW.

"It means launching a tender with predictable financial resources to implement the project," he said.

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