"Our composite indicator on budget transparency points out that countries such as Gabon, Angola, Republic of Congo and Mozambique are particularly at risk of poor data reporting, suggesting that the challenges related to public companies' indebtedness are not limited to these three countries ", reads a report on the impact of the covid-19 pandemic on state companies and, consequently, on public finances.
According to the document, sent to customers and to which Lusa had access, "the intensification of the financial difficulties of state-owned companies due to the crisis of the new coronavirus will increase the risks for most countries issuing sovereign debt".
The risks, it is pointed out, are "particularly high for sub-Saharan African governments due to high levels of debt, the strategic importance of public companies and weak governance, with state-guaranteed debt being the greatest immediate risk in countries like Ethiopia. and South Africa, but also being able to unbalance countries that are unable to help companies, such as the Republic of Congo or Mozambique ".
The overdue debt of public companies in sub-Saharan Africa is "significant", warns Moody's, estimating that public non-financial entities have a debt equivalent to 10.7 percent of the Gross Domestic Product (GDP).
State support, regardless of contractual obligations, is "highly likely", write Moody's analysts, arguing that "even if the level of formal support given is low in the region, averaging 3.4 percent of GDP, there is a strong likelihood that data reporting will be 'underneath' ".
Support, they say, will always be given since "in most cases these public companies operate in strategic sectors of the economy, employ a large number of people and provide essential services".
In the report, Moody's recalls the case of Sonangol, among others, to point out that "countries with natural resources where the production of oil and mines are managed by public companies are vulnerable to shocks in demand and raw materials, such as in Angola, which in 2016 was forced to help Sonangol with a transfer of US $ 10 billion, equivalent to 10 percent of GDP, following liquidity shortages caused by a drop in oil prices ".
Regarding Mozambique, analysts recall the case of 'hidden debt' to maintain that government contractual obligations must be higher than official data.
"In the case of Mozambique, for example, the government guaranteed about US $ 1 billion from two public companies without parliamentary approval, and when the companies were unable to generate sufficient funds to repay the loans, the Government tried to intervene to honor the guaranteed debt, that failed to pay, and threw the country into a default, "concludes Moody's.
