There is a serious shortage of foreign currency. The Confederation of Economic Associations of Mozambique (CTA) said 63 companies have waited more than six months to pay a total of $402mn of import invoices for raw materials and goods. This was blamed by CTA on very high reserve requirements, which were cut in January from 39% of deposits to 29%.
Mozambique cannot borrow abroad so government borrows domestically. Bank of Mozambique reported that domestic borrowing by government increased by $325mn last year. The cost of servicing the foreign debt rose by $280mn last year.
The bankrupt state airline LAM’s has been passed on to the three profitable state companies - Hidroelectrica de Cahora Bassa (HCB), the Ports and Rail Company (CFM) and EMOSE, the country’s largest insurance company. The companies will pay the government $130mn. Flights to Lisbon were immediately cancelled, after a loss of $21mn last year.
The Mozambican government will pay $17mn back pay for overtime to teachers and health professionals in two phases due to lack of money. The first phase of overtime payment will take place by March and the second half in the second quarter - April-June. Government also admits it owes $23mn to suppliers of goods and services.
