London, April 8, 2026 (Lusa) – Oxford Economics said on Wednesday that Mozambique's debt repayment to the IMF is a "sign of desperation" due to the need for external financial help and a "bold attempt" to secure funding.
"Liquidating debt early and in full is usually a financially responsible measure, and it would be easy to interpret Mozambique's latest move as a sign of fiscal prudence.
However, it is more accurate to reinterpret the country's actions as a sign of desperation," analysts wrote in a comment on the €630 million payment.
"Mozambique's recent payment is a bold attempt to obtain more credit from the IMF as they expect such a loan agreement to be finalised in the second quarter of 2026," analysts from the British consultancy's African department added. However, they warned a new loan would raise public debt to a projected 125% of GDP (Gross Domestic Product) before budget consolidation reduces it over the medium term.
In a note seen by Lusa, Oxford Economics said the repayment has a "certain irony" and noted that the country faces considerable budgetary and external pressure due to a huge public debt and an overvalued currency.
According to an IMF debt sustainability analysis, Mozambique is in "debt distress", a situation where a country cannot meet its financial obligations and needs international aid through donors, loans, or debt issues to balance the budget.
The consultancy said the government desperately needs external financial help to avoid further economic disasters.
It cited the closure of the Mozal aluminium foundry, a major industrial plant near Maputo, and the war between the US, Israel, and Iran as making help more urgent.
The country depends heavily on imports, and higher oil prices would soon lead to higher costs for fertiliser, food, and energy.
Oxford Economics' comments follow confirmation from Mozambique's finance minister of an early €630 million repayment to the fund. This cleared loans from the Poverty Reduction and Growth Trust, a fund providing low-interest loans to low-income countries.
In a statement last week, the government said it repaid all obligations linked to the Trust, totalling almost $700 million (€630 million).
"Authorities continue to work actively with the IMF technical team on a new programme to preserve macroeconomic stability and promote long-term development," the statement said.
They would continue this work during the upcoming World Bank and IMF spring meetings.
Finance Minister Carla Loveira said on Wednesday that the government used net international reserves to pay the €630 million, saying the decision did not put state institutions at risk.
"We paid the debt service we have with the IMF using the country's net international reserves, so these are reserves that are available at the level of international financial institutions," Loveira explained.
She said the resources used are the country's financial positions, meaning there was no need for a budget amendment.
Loveira said there was no risk to state institutions because the payment did not come from the state budget.
MBA/LYT // ADB.
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