Mozambique weighs restructuring public debt after vote unrest

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Mozambique weighs restructuring public debt after vote unrest

10:30 CAT | 20 Jan 2025

FILE - Minister of Finance Carla Louveira was sworn in office on Saturday, 18 January 2025. [File photo TVM]

Protests since the disputed October 9 elections have shaken Mozambique where debt rose to about 96% of gross domestic product last year.

Mozambique is considering restructuring its public debt after the government lost about 42 billion meticais ($658 million) of revenues in post-election unrest, the southeast African nation’s new finance minister said.

“This is work that is ongoing,” said Carla Louveira, who was appointed finance chief by President Daniel Chapo days after his inauguration last week.

Louveira, a deputy minister in the previous administration, declined to say if the government is looking to revamp both domestic and dollar debt when contacted by phone.

Protests since the disputed October 9 elections have shaken Mozambique where debt rose to about 96% of gross domestic product last year. The government has turned to local bonds to finance gaping deficits, with domestic debt nearly tripling in November compared with levels recorded five years ago.

The demonstrations in December alone cost the government around 14 billion meticais in revenues, Louveira said in comments broadcast Saturday over state-owned TVM. Standard Bank Group estimated that economic growth slowed to 2.5% last year, the worst outcome since 2020.

Mozambique in 2019 restructured its sole dollar bond into $900 million of notes due 2031. The government had defaulted on that debt after in 2016 admitting to having taken on more than $1 billion in debt without making the required disclosures to the International Monetary Fund.

One of the world’s poorest countries, Mozambique has been hoping large natural gas discoveries off its northeastern coast would generate billions of dollars in state revenue and transform the economy. An Islamic State-linked insurgency has delayed those projects for years.

Source: Bloomberg