The president of Mozambique’s Confederation of Economic Associations (CTA) says that the Council of Ministers Decree 23/2020, which approves tax and customs facilities to relieve the effect of Covid-19 on companies’ finances, is “impracticable” for the majority of firms.
Speaking on STV’s Jornal da Noite programme on Friday (May 8), Agostinho Vuma complained that the decree excludes a large number of domestic companies with turnover of more than 2.5 million meticais.
“We estimate that 15,000 companies have business volumes over 2.5 million meticais, and so will not benefit from these government tax facilities,” the president of the CTA said.
Although the decree in question suspends the payment of some corporate taxes until the first quarter of 2020, Vuma says that “these measures cannot be a relief if they do not fall within the classification of the IRPC regime (Corporate Income Tax) ) due to the [stipulated] 2.5 million meticais turnover ceiling”.
“Companies are going to go bankrupt, because we are in a pandemic situation that is not expected to end anytime soon. These measures do not address the primary concerns of the private sector.”
Regarding the monetary policy measures adopted by the Bank of Mozambique, with the emphasis on reducing the reference interest rate (MIMO rate) and a credit line of US$500 million for commercial banks, Vuma said it was necessary that “acceptable interest rates” be applied in this pandemic context if the measures were to “rescue the business sector”.
“This money [US$500 million credit line] is not making itself, felt because commercial banks are not taking action,” Vuma concluded.
States “debt to business”
Still in the context of the deceleration of economic activity caused by the coronavirus pandemic, Vuma said that the CTA was urging the government to continue paying arrears of the state’s debt to the private sector as a way of relieving pressure on companies’ cash flow.
“There is a huge anxiety in the business sector. From our relationship with Minister of Economy and Finance Adriano Maleiane, we [are in a position to] ensure that conditions exist to continue paying debt arrears, and this is reflected in the State Budget,” he explained.
Regard to the employment relations, Vuma said that negotiations were taking place with the government with a view to having the National Social Security Institute (INSS) put resources into commercial banking to be lent out at a 5% interest rate.
By Edson Arante