Mozambique cuts rate to record low to aid recession economy
File photo: Lusa
Mozambican public debt service costs fell 7.5% in the first half of the year, compared to the same period in 2024, to 27.188 million meticais (€364.3 million), according to government data.
According to a Ministry of Finance implementation report seen by Lusa today, this represents 42.6% of the annual forecast for 2025, which is almost 63.893 million meticais (€856.1 million).
It adds that interest payments on domestic debt during this period amounted to 21,340 million meticais (€285.9 million), up 0.2% compared to the first half of 2024 and equivalent to 41.9% of the budget for the entire year.
The cost of paying interest on foreign debt fell 6.2%, to almost 5,828 million meticais (€78 million), corresponding to a 46.4% annual budget fulfilment.
The Mozambican government previously warned of a “very large impact” on domestic public debt service in the event of interest rate fluctuations, given the increase in the outstanding balance, and expects to spend €267 million in September alone.
“Given the increase in the domestic debt stock in recent years, an interest rate shock will have a significant impact on domestic debt service,” notes the Medium-Term Fiscal Scenario (CFMP) for 2026-28.
It adds that current data shows “a concentration of payments in specific periods, which could put pressure on the public treasury, requiring constant monitoring throughout the period”.
The report even states that for this September, “expected payments for amortization and interest total approximately 20 billion meticais [€267 million],” making this “the largest amount to be disbursed throughout the year” of 2025.
“This scenario poses a risk as it reflects the growing dependence on domestic debt, the servicing of which has become a substantial burden on public spending, coupled with limited access to external credit and the growing need to finance the budget deficit, thus intensifying pressures on public finances,” the document noted.
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