Mozambique: Unpaid debt service from 2024 all settled – government

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Mozambique: Unpaid debt service from 2024 all settled – government

7:09 CAT | 02 Jun 2025

File photo: Lusa

Mozambique’s debt service that remained unpaid in 2024, more than half of which was owed to Portugal, was fully settled in the first quarter, according to a report from the Ministry of Finance consulted by Lusa on Sunday.

In the report on the evolution of public debt from January to March this year, it is stated that total external public debt service amounted to $210.34 million (€185.6 million), of which $136 million (€120 million) corresponded to capital repayment and $74.34 million (€65.6 million) to interest payments.

“This amount represents an increase of $92.61 million [€81.7 million] (78.7%) compared to the fourth quarter of 2024, justified by the full payment (100%) of arrears carried over from 2024,” the document said.

“It should be clarified that, following the arrears reported in the 2024 annual debt report, the debt service to the IMF, under the allocation of SDRs [International Monetary Fund assets] for financing the State Budget, was fully settled in 2024,” it adds.

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

In its report on public debt for 2024, published in early May by Lusa, the Ministry of Finance stated that, at the end of last year, “the state’s arrears related exclusively to external debt,” emphasising that “no delays in the payment of domestic debt service were found.”

“Totalling 3.4 billion meticais (€47.3 million), distributed between 2.95 billion meticais (€40.5 million) in capital and 492.28 million meticais (€6.8 million) in interest, amounts carried over 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,” the document said.

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

The report also explained that “the delay observed was mainly due to limited revenue collection, conditioned by the post-election climate of instability,” which lasted for five months after the Mozambican general elections on 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 cover debt servicing in 2024, with a total of 115,097.89 million meticais (€1.602 million) budgeted, compared to a forecast of 123.433.58 million meticais (€1.718 billion), resulting in a deficit of 8,335.69 million meticais (€116 million), leading to the transfer of charges to the following financial year,” the document also states.

In addition, the report acknowledges that “there were distortions in the projections caused by the limitations of the old CS-DRMS debt management system, 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’s cash flow, given the increase in financial commitments that must be honoured in the next budget year [2025]. This challenging scenario highlights the urgent need to implement effective measures to mitigate the risks associated with debt servicing and optimise the State’s financial flows.”

Source: Lusa