Mozambique paid US$40.37 million in interest on ‘hidden debt’ Eurobonds up to March

Login

Register

http://www.clubofmozambique.com/

Mozambique paid US$40.37 million in interest on ‘hidden debt’ Eurobonds up to March

2:02 CAT | 05 Jun 2025

in file CoM

The Mozambican Eurobond issue, restructured in 2019 after the hidden debt scandal, cost the state US$40.37 million (€35.3 million) in interest up to March, according to data from the Ministry of Finance.

At stake is the Mozam 2023 issuance, worth US$897.07 million, equivalent to 9.1% of the country’s external debt stock, which Mozambique will start to repay from 2028 to 2031. It is currently paying only interest to creditors.

Throughout 2024, Mozambique paid US$80.75 million in interest on this Eurobond issue, almost double the amount paid in the previous year, when it reached US$44.87 million, according to earlier figures from the Ministry of Finance.

The Mozambican government was forced to restructure the previous Eurobond issue of 2019, totalling US$726.5 million and due in 2023, after the scandal of hidden debts emerged (in an estimated amount of US$2.7 billion), according to figures presented by the Mozambican Public Prosecutor’s Office, in a case that the Mozambican state won in a London court in July, 2024 (currently under appeal).

The restructuring operation, which allowed the country to escape a selective default on the international market, was completed on 30 September 2019, with the approval of more than 75% of the initial bondholders, increasing the value and delaying the start of amortization by five years.

The first repayment tranche of this issuance is US$250 million and is scheduled for 2028.

Mozambique’s public debt stock increased by 26.2% in five years, closing 2024 at a record US$16.238 billion (€14.227 billion), according to previous data from the Ministry of Finance.

“This increase was driven, to a large extent, by the accelerated growth of domestic debt, resulting from the financing of the Treasury deficit, following the freezing of support for the State Budget by international partners. The Central Government’s debt remains predominantly composed of external debt, which represents 61% of the total, while the remaining 39% corresponds to domestic debt,” states the 2024 public debt report.

The document “highlights Mozambique’s fiscal adjustment trajectory and progress in debt management”, “however, the growing dependence on domestic financing and the pressure of debt servicing on the State treasury impose additional challenges to fiscal sustainability”.

According to the report from the Ministry of Finance, the public debt stock was US$12.935 billion (€11.5 billion) in 2020 and grew by a further 7.9% in 2024 compared to the previous year.

“This growth was driven by domestic debt, through the issuance of Treasury Bills and financing through the Central Bank, with an increase of 29.7% and representing 39% of the total stock, revealing a growing dependence on domestic financing”, the document warns.

According to the same source, on the other hand, total external debt fell by 2.6% in 2024, “influenced by debt relief to Iraq, as well as data adjustments”, resulting from the migration of the old debt management system, CS-DRMS, to the new MERIDIAN system.

Source: Lusa