Mozambique: Public debt soars 26% in five years

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Mozambique: Public debt soars 26% in five years

1:40 CAT | 12 May 2025

File photo: Lusa

Mozambique’s public debt increased by 26.2% in five years, closing 2024 at a record US$16.238 billion, the Ministry of Finance announced, warning about the continued growth of domestic debt.

“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, to which Lusa had access today.

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 from the old debt management system, CS-DRMS, to the new MERIDIAN system.

On the other hand, the report points out that the “current debt portfolio continues to be exposed to a high refinancing risk” and that last year alone, of the total debt portfolio, 22.0% “matured in one year” and 47.7% of the total domestic debt “had to be refinanced in 2024, while external debt only 5.6%.

“The cost-risk analysis shows that, in 2024, the total fixed interest rate debt portfolio was 89.5%. The data also show that the risk is greater in domestic debt due to the short maturity structure, with 60.9% of the total sensitive to changes in interest rates in one year. Likewise, the total debt portfolio is exposed to a high exchange rate risk, given that 61.0% is made up of instruments indexed to the exchange rate”, it is highlighted.

The report also recalls that in 2024 the Mozambican state reached an out-of-court agreement involving Credit Suisse and the Privinvest group, in the High Court of London, “which reduced the State’s exposure in relation to Undeclared Debts, from US$1.4 billion to US$220 million” (€1.245 to €195.5 million euros).

This amount, the document explains, corresponds to “an 84% reduction in the total claimed by the banks, of which around 66% corresponds to the capital component” and “in return”, Mozambique will receive compensation of over US$825 million (€733.2 million).

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Source: Lusa