Mozambique: Debt service cost more than healthcare in H1 – Lusa

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Mozambique: Debt service cost more than healthcare in H1 – Lusa

7:45 CAT | 23 Oct 2023

FILE - For illustration purposes only. [File photo: TVM]

Mozambique spent €355.3 million on public debt charges in the first half of this year, more than all its commitments to the health sector in the same period, according to government figures.

According to a report by the Ministry of Economy and Finance on budget execution in the first half of the year, to which Lusa had access on Friday, the state spent 23.87 billion meticais (€355.3 million) on public debt, essentially internal and external interest payments, compared to 16.51 billion meticais (€245.6 million) in the same period in 2022.

In six months, this is 57.7% of the total budgeted by the government for 2023 for these items, which is 41.4 billion meticais (€616 million).

The amount spent on interest on public debt in the first half of the year, according to the same document, is higher than the 17.65 billion meticais (€262.6 million) spent on health, in this case, 38.7% of the total budget for 2023, or the 5.39 billion meticais (€80.1 million) spent on agriculture, also from January to June.

READ: Mozambique invests around US$30 in health care per citizen

In July, the International Monetary Fund (IMF) estimated that servicing the public debt – total interest paid and principal repaid – will cost Mozambique $2.27 billion (€2.018 billion) this year, almost double the figure for 2022, equivalent to 11.8% of GDP.

The figures are contained in an IMF analysis of Mozambique’s public debt for the period 2022 to 2024, which also forecasts debt servicing costs of $1.551 billion (€1.38 billion) next year, equivalent to 7.1% of Mozambique’s Gross Domestic Product (GDP).

By 2022, the IMF estimates that servicing Mozambique’s public debt will cost almost $1.19 billion (€1.06 billion dollars), equivalent to 7.2% of GDP.

Also according to IMF figures, Mozambique ended last year with a total public debt of more than $18 billion (€16.032 billion), equivalent to 94.1% of the estimated GDP, of which $13.61 billion (€12.1 billion) was contracted externally.

According to the IMF, Mozambique’s debt is assessed as “high risk but sustainable” in perspective, taking into account future revenues from natural gas production in the country.

At the end of December, the World Bank was a creditor of almost $3.017 billion (€2.68 billion), and on the domestic market, Mozambique had a debt of over $4.4 billion (€3,92 billion).

After a recession of 1.2% in 2020 and GDP growth of 2.4% in 2021, the IMF estimates that the Mozambican economy grew by 4.2% in 2022, admitting that this growth could increase to 7% this year, while the government predicts 5%.

Source: Lusa