Mozambique: Over 50% of external debt service arrears in 2024 were to Portugal

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Mozambique: Over 50% of external debt service arrears in 2024 were to Portugal

7:38 CAT | 12 May 2025

File photo: TVM

Mozambique missed external debt service payments of €47.3 million in 2024, more than half to Portugal, citing difficulties due to post-election unrest, according to the government, which warns of additional pressure in 2025.

In the report on the public debt for 2024, by Mozambique’s Ministry of Finance and to which Lusa had access on Friday, it is stated that, at the end of last year, “the state’s arrears referred exclusively to servicing the external debt”, emphasising that “there were no delays in the payment of domestic debt servicing”.

“Totaling 3.4 billion meticais [ €47.3 million], distributed between 2.95 billion meticais [€40.5 million] in principal and 492.28 million meticais [€6.8 million] in interest, figures carried forward to 2025. Among the main creditors, Portugal was the largest bilateral creditor, with a total of 1,818.76 million meticais [ €25.3 million] in arrears,” reads the document.

It adds that multilateral institutions “were also among the most significant creditors”, such as the International Monetary Fund, with 718.75 million meticais (€10 million).

The report also explains that “the delay was mainly due to limited revenue collection, conditioned by the climate of post-election instability,” which lasted for five months after the Mozambican general elections of 9 October, which were strongly contested by the opposition.

“In addition, the PESOE [economic and social plan and state budget] did not fully provide for the amounts needed to service the debt in 2024, with a total of 115,097.89 million meticais [€1.602 billion] having been budgeted, compared to a forecast of 123,433.58 million meticais [1.718 billion euros], which resulted in a deficit of 8.335,69 million meticais [€116 million], leading to the transition of charges to the following financial year,” the document also reads.

In addition, the report recognises that “there were distortions in the projections caused by the limitations of the old CS-DRMS system” for debt management, “leading to deviations from the ceiling approved for 2024 and resulting in the incidence of interest on arrears”.

“The transition of these amounts to 2025 implies additional pressure on the state treasury, given the increase in financial commitments that must be honoured in the next budget year [2025]. This challenging scenario accentuates the urgent need to implement effective measures to mitigate the risks associated with debt servicing and optimise financial flows in the state.”

The report also states that, by the end of 2024, the stock of outstanding external debt “additionally includes outstanding commitments to four bilateral creditors that do not consider debt relief under the terms agreed with the Paris Club,” cases of Libya, of US$253.38 million (225, 2 million euros), Angola with US$61.45 million (54.6 million euros), Bulgaria with US$57.8 million (51.3 million euros) and Poland with US$21.7 million (19.2 million euros), totalling US$394.33 million (350.4 million euros).

“The government is still engaged in negotiations with these creditors, with a view to obtaining coordinated solutions for the settlement of these financial liabilities,” it concludes, recalling the “debt relief consensus reached with Iraq” last year, for 80%, equivalent to US$256.13 million (€227.6 million), of the total debt of US$320.16 million (€284.5 million) and rescheduling the remaining 20% for a period of 15 years, from 2029 to 2043.

Source: Lusa