Mozambique: State Business Sector’s debt drops 3.75% in three months

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Mozambique: State Business Sector’s debt drops 3.75% in three months

12:44 CAT | 28 May 2025

File photo: Lusa

The stock of debt directly contracted by the State Business Sector (SEE) of Mozambique fell 3.75% in the first quarter of this year, reaching 36.94 billion meticais (€508 million) in March, according to data from the Ministry of Finance.

“This performance is essentially the result of fulfilling the debt service, as well as the payment of the external debt of the extinct EMEM [Empresa Moçambicana de Exploração Mineira, now dissolved],” reads the report on the evolution of public debt in the first quarter, consulted by Lusa.

It adds that the reduction in the State Business Sector debt stock “is explained, among other factors, by the contraction of the external debt stock by 1,478.91 million meticais [€20.3 million], influenced, to a large extent, by the decrease observed at the level of the companies EMEM, Petromoc and BNI”.

In nominal terms, the State Business Sector’s external debt fell by almost 1,439 million meticais (€19.8 million) in the first three months of 2025.

Overall, the State Business Sector’s internally contracted debt stock increased by 0.19% between January and March, while that contracted externally fell by 8.29% in the same period.

Despite this decline, the tax exposure of the two Mozambican public companies in the aviation sector alone amounts to 1.2% of gross domestic product (GDP), according to the government’s forecast in the budget proposal for this year, which signals concern about the situation.

“The State Business Sector companies have faced financial challenges, especially Airports of Mozambique (ADM) and Mozambique Airlines (LAM), reflecting non-compliance with their financial obligations,” warns an Economic and Social Plan and State Budget (PESOE) 2025 supporting document.

According to the proposal, for this year “the tax exposure associated with the two companies is estimated at around 1.2% of GDP”, referring to LAM, the flag carrier, and ADM, which manages the country’s airports.

The budget proposal points out, in the country’s “macroeconomic stability” program, the need to “reform” the State Business Sector.

According to the document, Mozambique has 11 public companies, seven exclusively state-owned companies and nine with minority stakes in liquidation.

The total debt stock of the Mozambican State Business Sector had already fallen by 1.88% during 2024, compared to the previous year, with almost half of that held by the two public companies in the airline sector.

According to the Ministry of Finance’s annual public debt report, the volume of 38,379 million meticais (€534 million) at the end of last year contrasts with the almost 39,114 million meticais (€544 million) on December 31, 2023.

“This fall was driven by a 4.87% contraction in the SEE’s direct internal debt, attributed to the implementation of a more restrictive policy in contracting new financing and fulfilling debt service,” reads the document, which also acknowledges that the SEE’s external debt, on the other hand, grew 1.8% to almost 17,796 million meticais (€247.5 million), “reflecting the increase in late payments”.

According to the document, the public company Aeroportos de Moçambique (ADM) represented 32.3% of the total debt of the State Business Sector at the end of 2024, corresponding to almost 12,391 million meticais (€172.3 million), despite having fallen 2.8% in the space of a year. As for Mozambique Airlines (LAM), a state-owned company, it held 16.5% of the debt stock of the Mozambican State Business Sector, the equivalent to 6,326 million meticais (€88 million), 6.5% less than in 2023.

The National Bank for Economic and Social Development of Brazil (BNDES) leads the list of direct external creditors of the Mozambican State Business Sector, holding 52.5%, equivalent to 9,338 million meticais (130 million dollars) of this stock, financing contracted by the Airports of Mozambique (ADM) for the construction of the Nacala airport.

Source: Lusa