Mozambique: Public debt rises 2.7% in Q1

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Mozambique: Public debt rises 2.7% in Q1

3:43 CAT | 27 May 2025

File photo: DW

Mozambique’s public debt stock grew again by 2.7% in the first three months of the year, to over 1.071 billion meticais (€14.7 billion), according to official data.

According to the Ministry of Finance report on the evolution of public debt in the first quarter, to which Lusa had access today, this is a new increase, after the historic mark of one trillion meticais registered at the end of 2024.

According to the calculations of the Ministry of Finance, in absolute terms, the debt grew by almost 28,395 million meticais (2.7%), compared to the fourth quarter of 2024.

This performance, the report explains, “is essentially due to the increase in domestic debt”, which shot up 8.9% in three months to 443,218 million meticais (€6,093 million), “mainly justified by new debt issues under the Central Bank’s Credit Facility”, 20% of the total stock, and by refinancing Treasury Bill issues.

Lusa reported this month that the Mozambican government wants to reduce the public debt stock to 67.6% of the Gross Domestic Product (GDP) this year, although it warns that its increase is one of the fiscal risks classified as “high”, according to the budget proposal.

According to the Economic and Social Plan and State Budget (PESOE) for 2025, approved this month by the deputies of the Mozambique Liberation Front (Frelimo, party in power) and of Podemos (the largest opposition party), the public debt stock reached 74% of GDP in 2024 and the goal is to reduce this figure to 60.8% by 2029.

The opposite possibility, of an “increase in the public debt stock”, is, moreover, identified in the abovementioned document as a “high” risk, with the government assuming as objectives to counteract it “the option of donations and highly concessional credits”, and the introduction of liability management operations, including “swap auctions, buybacks and early redemptions”.

“The impacts of lower economic growth in 2025 could exacerbate the risk associated with public debt, raising the ratio to 80.5% of GDP,” the budget draft reads. “Thus, the pressures arising from the need for financing could have an impact on the commitments to service the domestic debt, which represents around 65% of the total service, which will require greater control and attention on the part of the State, especially in September, which will reach a maximum of 26.9 billion meticais [€372 million].”

The public debt stock rose 7.9% from 2023 to 2024, mainly due to the “accelerated growth of domestic debt, resulting from the financing of the Treasury deficit, after the freezing of support for the State Budget by international partners,” the document adds.

The PESOE forecasts GDP growth of 2.9% for 2025, an average annual inflation rate of 7%, exports of goods worth US$8,431 million (€7,379 million) and Gross International Reserves of US$3,442 million (€3,045 million), equivalent to 4.7 months of coverage for imports of goods and services, excluding megaprojects.

State revenue for the whole year is expected to amount to more than 385,871 million meticais (€5,347 million), equivalent to 25% of GDP, and total expenditure to 512,749 million meticais (€7,107 million), corresponding to 33.2% of GDP, generating a budget deficit of 8.2%.

Source: Lusa