Mozambique: Debt servicing costs set to almost double this year, to $2.27B – IMF

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Mozambique: Debt servicing costs set to almost double this year, to $2.27B – IMF

12:14 CAT | 21 Jul 2023

File photo: O País

Mozambique is set to spend $2.268 billion (€2.018 billion) servicing its public debt this year, almost double the amount spent in 2022, and equivalent to 11.8% of projected domestic product, the International Monetary Fund has estimated.

The calculations are contained in an IMF analysis of Mozambique’s public debt for the period 2022 to 2024, released this month and consulted on Friday by Lusa.

For next year, it forecasts debt servicing costs of $1.551 billion (€1.380 billion), equivalent to 7.1% of projected GDP.

In 2022, the IMF estimates that Mozambique’s public debt servicing costs – total interest paid and principal repaid – cost almost $1.191 billion ($1.060 billion), equivalent to 7.2% of GDP.

Also according to IMF data, Mozambique ended last year with total public indebteness of more than $18.016 billion (€16.032 billion), equivalent to 94.1% of estimated GDP, of which $13.610 billion (€12.111 billion) had been contracted externally.

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

Among the external debt owed to bilateral partners at the end of last year, China led in terms of the origin of the debt, with more than $1.717 billion (€1.528 billion), followed by Portugal, with $485.5 million (€432 million).

At the end of December, the World Bank was owned almost $3.017 billion (€2.685 billion) by Mozambique, while in the domestic market there was more than $4.406 billion (€3.921 billion) of outstanding public debt.

After a recession of 1.2% in 2020 and GDP growth of 2.4% in 2021, the IMF estimates that Mozambique’s economy grew by 4.2% in 2022. It sees growth this year accelerating to as much as 7%, while the government predicts 5%.

Source: Lusa