London, Sept. 28, 2026 (Lusa) - The credit rating agency Standard & Poor's (S&P) has downgraded Mozambique's rating to CCC, saying it is increasingly likely the country will have to restructure its external public debt because of its difficult budgetary situation.
«The likelihood of Mozambique restructuring its sole Eurobond [foreign-currency debt issue] currently in circulation, maturing in 2031, is increasing against a backdrop of severe budgetary and foreign-exchange liquidity pressures», write the analysts in the note accompanying the decision to downgrade the rating from CCC+ to CCC, two notches above Financial Default.
According to S&P's analysts, who have already placed domestic public debt on Selective Default due to frequent delays in repaying metical-denominated issues, the outcome of the debt sustainability analysis carried out by the International Monetary Fund (IMF) «will be a key factor in determining whether Mozambique will have to restructure its Eurobond before repayment begins in March 2028».
The country continues to benefit from a positive long-term outlook once the liquefied natural gas projects come on stream and, they say, will generate substantial tax revenues, but the challenge lies in managing liquidity and budgetary resources in the meantime.
«The significant benefits of the gas projects for the fiscal and external positions are only expected to materialise after 2030,» notes S&P, emphasising that the IMF itself is likely to demand a debt restructuring before proceeding with a fiscal adjustment programme in the country.
«Any resumption of IMF financing will likely require the implementation of politically challenging reforms, including measures to curb the public sector wage bill and introduce greater exchange rate flexibility,» the analysts write, stressing that the results of the updated debt sustainability analysis will be decisive for the country's future.
«Depending on the size of the remaining financing gap after taking into account future adjustments to government policies, a restructuring of external debt may be necessary to restore debt sustainability as a precondition for saying the IMF will provide financing,» they stress.
Externally, Mozambique has honoured its debt instalment payments, but internally there have been delays, which credit rating agencies regard as a ‘default', i.e. failure to make payments by the agreed deadline and in the agreed amount.
The protests that followed the 1 October 2024 elections, delays in Liquefied Natural Gas (LNG) projects and the suspension of Mozambique's programme with the IMF in April 2025 have presented challenges to the government's efforts to reform its wage bill and improve the management of public cash flow; these developments led to delays of up to six months in interest and principal payments on Treasury bonds, whilst also contributing to the accumulation of arrears owed to domestic suppliers and official external creditors», they point out.
At the end of last year, Mozambique had arrears amounting to $98 million (€86 million), representing 0.4% of GDP, and $230 million (€201 million) in debt to official external creditors, representing 0.9% of GDP.
MBA/ADB // ADB.
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