CENTRAL BANK HOLDS INTEREST RATES STEADY

The Bank of Mozambique has opted to keep its key interest rates unchanged for at least the next month. A statement from the Bank’s Monetary Policy Committee, which met in Maputo on 14 March, declared that “in light of the projections for inflation in the short and medium term, which continue to reflect the prevalence of factors of pressure, the Committee thinks it important to strengthen the coordination of fiscal-monetary and sector policies, as well as the monitoring of the main macro-economic indicators”. That meant there was no room for reducing interest rates. So the Standing Lending Facility (the interest rate paid by the commercial banks to the central bank for money borrowed on the Interbank Money Market) will remain at 10.75 per cent. It rose to this figure, from 9.75 per cent, in mid-February. This is the highest interest rate the Bank of Mozambique has charged since September 2012. The rate then fell gradually, reaching 7.5 per cent in November 2014. It remained at that level for a year, but three rate rises in October, November and December 2015 brought it back up to 9.75 per cent. That rate held in January, but in February the upward trend resumed. The Standing Deposit Facility (the rate paid by the central bank to the commercial banks on money they deposit with it) remains at 4.25 per cent. Read more…

MOZAMBIQUE TRYING TO RENEGOTIATE EMATUM LOAN

The Mozambican government is attempting to renegotiate the terms of the bond issued in 2013 by the Mozambican Tuna Company (EMATUM) so that payment will only fall due in 2023, reports the 14 March issue of the independent newssheet Mediafax. The bond issue was for 850 million dollars, fully guaranteed by the government. The declared purpose of the money was to pay for 24 tuna fishing boats and six coastal defence vessels built in a shipyard in the French port of Cherbourg. Under the original terms of the EMATUM bond, the money must be repaid in seven years with a two year grace period, and at the extremely high interest rate of LIBOR (London Inter-Bank Offered Rate) plus 6.5 per cent. Last year Finance Minister Adriano Maleiane announced the government's intention to try to renegotiate the terms of the loan. A source close to the negotiations between the government and the bondholders said that the government strategy is to replace the current six monthly repayments with a lump sum, covering both interest and capital, payable in 2023. Six monthly installments are a heavy burden for the Mozambican economy in its current state – but by 2023 income should be flowing into the state coffers from the Liquefied Natural Gas (LNG) projects in the Rovuma Basin in the far north. The predicted gas bonanza is thus expected to allow Mozambique to meet its EMATUM commitments. So the EMATUM debt titles would be swapped for government debt titles for exactly the same value, but with an extra three years to pay. Read more…

RATINGS AGENCIES THREATEN MOZAMBIQUE

Credit rating agencies are punishing Mozambique for the government’s attempts to renegotiate the EMATUM bond. The Standard and Poor’s agency threatened to downgrade Mozambique to SD (Selective Default). A release from S&P on warned that the exchange offered by the government would be “tantamount to default, according to our criteria”. S&P’s immediate move was rather less drastic – “we are lowering our long- and short-term foreign currency ratings on Mozambique to 'CC/C' from 'B-/B'. The local currency ratings were affirmed at 'B-/B'”. CC is regarded as “10 levels below investment grade”. A second ratings agency, Moody’s, acted in similar fashion, downgrading Mozambique to B3 from B2. Moody’s also downgraded the EMATUM loan participation notes themselves from B2 to Caa2, with a warning that the rating “remains on review for further downgrade”. Read more…

ECONOMY

Newsletter n°234 - March 18, 2016

Editor: Paul Fauvet I AIM&CTA Copyrights

AIM: Rua da Rádio Moçambique - Maputo - www.aim.org.mz I CTA: Av. Patrice Lumumba, 927 - Maputo - www.cta.org.mz

Email: ctanewsletter@cta.org.mz I Tel: + 258 21 32 10 02 I Fax: + 258 21 32 10 01

NEWSLETTER

LARGEST SHIP EVER DOCKS IN MAPUTO

The largest ship ever to dock in any Mozambican port arrived in Maputo on 15 March. The ship is the Golden Kathrine, a bulk carrier registered in Hong Kong, which is 292 metres long with a gross weight of 93,237 tonnes. It can carry a bulk cargo of 80,000 tonnes. It was only possible for such a large ship to dock in Maputo because of the dredging of the port access channel undertaken by the Maputo Port Development Company (MPDC). In 2010-2011 the channel was deepened from 9.4 to 11 metres, which contributed to increasing the volume of cargo passing though the port from 12 million tonnes in 2011 to 19 million in 2014. Now MPDC plans further dredging as from May which will deepen the channel to 14.2 metres. Read more…

MOZAMBIQUE CONFISCATES BOAT FOR ILLEGAL FISHING

The Mozambican maritime authorities have decided to confiscate the Nessa 7, a longline tuna fishing boat flying the Panamanian flag, which was seized in December when it was caught fishing illegally in Mozambican waters. The boat and all the fishing gear on board revert to the Mozambican state. In addition, the owner must pay a fine of 4.5 million meticais (about 94,000 US dollars), and the captain is banned from fishing in Mozambican waters for 36 months. The national director of operations in the Ministry of the Sea, Inland Waters and Fisheries, Leonild Chimarizene, showed the confiscated boat to reporters on 16 March. He said that, immediately after it was seized, it was taken to Maputo Fishing Port for inspection. “From the inspection and investigations made”, said Chimarizene, “it was shown that the vessel entered Mozambican waters without any communication or prior authorization by the relevant Mozambican authorities. It was hiding identity marks, and was exercising activities concerned with fishing, without authorization. On board it possessed gear for longline fishing of tuna”. Read more…

200 TIMBER WORKERS AT RISK OF UNEMPLOYMENT

Over 200 workers of the Jihad Madeiras 2007 (JM7) timber company in the central Mozambican province of Zambezia, are in danger of losing their jobs after a sudden change in the specifications for processed timber demanded by the company’s Chinese clients. According to a report carried by the independent television station STV, the Chinese buyers are demanding that the planks they purchase must be at least 20 centimetres thick – but Mozambican legislation on the matter says that planks for export can be no more than 12.5 centimetres thick. JM7 manager Ali Saleh Hawil declared “We’re being squeezed, because the Mozambican forestry law says one thing, and the client in China wants something else. This is putting the company in a complicated position, because we need to operate. Every month we spend a million meticais (about 21,000 US dollars) on wages, not to mention the company’s logistics”. The company says it has invested millions of dollars in acquiring equipment to cut and saw timber, and fears this will all be wasted unless the government gives way to the demands of the Chinese buyers. Read more…

JAPANESE ENVOY MEETS WITH NYUSI

The Japanese government wants to step up its cooperation with Mozambique, particularly in infrastructures and in the training of human resources, according to Ken Shimanouchi, a special envoy from Japanese Prime Minister Shinzo Abe. Speaking to reporters shortly after he was received by President Filipe Nyusi, Shimanouchi said that Japan believed the priorities for its cooperation with Mozambique were “first the construction of high quality infrastructures for Mozambique, and also the training of human resources for the country’s development”. Shimanouchi also brought an invitation for Nyusi to participate in the Sixth Tokyo International Conference for African Development (TICAD VI). For the first time, the conference will be held, not in Japan, but in Africa. It is scheduled for 27-28 August in the Kenyan capital, Nairobi. Read more…

COOPERATION

NYUSI INVITES VIETNAMESE BUSINESSES TO INVEST

Mozambican President Filipe Nyusi on 12 March invited Vietnamese businesses to invest in Mozambique. He was speaking in Maputo at a Mozambique/Vietnam Business Forum, which was also attended by the Vietnamese President, Truong Tan Sang. This invitation, Nyusi said, arose in recognition of Vietnam’s experience in producing such goods as rice, clothing, footwear, electrical appliances, and fishing gear. Nyusi challenged Vietnamese companies to include in their business initiatives projects to process locally Mozambican natural resources, thus creating jobs and increasing household income. He added that the government is also interested in learning from Vietnam’s experience in reviving coastal shipping. The Mozambican coast is over two and a half thousand kilometers used, and would be a cheap transport option for moving goods from one end of the country to the other, but currently little use is made of this option. Read more…

ONLY JUDGES MAY AUTHORISE PHONE TAPPING

The Mozambican parliament, the Assembly of the Republic, on 16 March passed the second and final reading of a government bill on telecommunications, but only after it had been amended to make clear that phones may only be tapped if the interception is authorized by a criminal investigation judge. The clause on phone tapping was the reason why the bill did not progress beyond its first reading when it came before the Assembly last November. The original version of the bill merely stated that phone tapping must be authorized by “the relevant authority”. This was not good enough for deputies of the rebel movement Renamo who insisted that the bill should stipulate that only a court can order a phone tap. Without that explicit guarantee, Renamo voted against the bill. With fears that the bill might be challenged on constitutional grounds unless it was amended, the government agreed to change the clause on phone tapping to make it absolutely clear that this must be authorized by a judge. Read more…

POLICE SEIZE RHINO HORN AT AIRPORT

The Mozambican police last week seized over 76 kilos of rhinoceros horn at Maputo International Airport. Announcing the seizure at a press conference on 14 March, the spokesperson for the Maputo City Police Command, Orlando Mudumane, said the horns were discovered in two suitcases, as they were being put on a flight to Kenya. “The Mozambican police, in coordination with customs, seized two suitcases containing 76.6 kilos of rhinoceros horn and six kilos of lion claws and teeth”, said Mudumane. The owner of the suitcases and their illicit contents has not yet been identified. Read more…

DONATED EQUIPMENT STOLEN FROM BEIRA HOSPITAL

The management of Beira Central Hospital has confirmed that 70 per cent of the medical equipment donated to the hospital just a year ago by the Rotary Club of Australia has been stolen, and ended up in a private clinic. According to a report given to Sofala provincial governor Helena Taipo, the stolen equipment intended for the hospital’s operating theatres alone was valued at between 400,000 and 500,000 US dollars. On 14 March some of the stolen goods were recovered notably a surgical table and two beds which were being used in the Sorridente private clinic. The Sofala provincial government spokesperson, Helcio Canda, said the theft was made possible by the way the hospital received the donation, which completely bypassed the Provincial Directorate of Health and the governor’s office. Canda regarded this as symptomatic of the disorganization reigning in Beira Central Hospital. “It’s a total lack of discipline with frequent thefts of medicines, countering the efforts of the government, in partnership with investors, to serve the people with dignity”, declared Canda. “The material is stolen from the central hospital and sent to a private clinic”. Read more…

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