Maputo, May 12, 2025 (Lusa) - Mozambique's government wants to reduce public debt to 67.6% of 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 2025 Economic and Social Plan and State Budget (PESOE) proposal, approved on Saturday by MPs from the Mozambique Liberation Front (Frelimo, in power) and Podemos (the largest opposition party), the public debt reached 74% of GDP in 2024 and the target is to reduce this burden to 60.8% by 2029.
The document identifies the opposite possibility, an "increase in the public debt," as a "high" risk. To counter this, the government sets as objectives "the option of grants and highly concessional loans" and the introduction of liability management operations, including "exchange auctions, repurchases and early redemptions".
"Lower economic growth in 2025 could exacerbate the risk associated with public debt, raising the ratio to 80.5% of GDP. Thus, the pressures arising from the need for financing could have an impact on domestic debt service commitments, which represent about 65% of total debt service, requiring greater control and attention from the state, especially in September, when they will reach a maximum of 26.9 billion meticais (€372 million)," reads the budget proposal.
The public debt rose by 7.9% from 2023 to 2024, to the equivalent of almost $16.33 billion (€14.41 billion), mainly due to the "rapid growth of domestic debt, resulting from the financing of the Treasury deficit after the freezing of the budget deficit," the budget proposal said.
Of the total amount of the proposal, the first prepared by the government led by Daniel Chapo, who took office as Mozambique's fifth president last January, $9.96 billion (€8.79 billion) related to external debt, which includes multilateral and bilateral contractual loans, as well as "eurobonds" MOZAM 2032, and close to $6.37 billion (€5.62 billion) relating to domestic debt.
In the PESOE, Mozambique's government forecasts GDP growth of 2.9% for 2025, an average annual inflation rate of 7%, exports of goods worth US$8.431 billion (€7.379 billion) and gross international reserves of US$3.442 billion (€3.045 billion), equivalent to 4.7 months of coverage of 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 billion), equivalent to 25% of GDP, and total expenditure to 512,749 million meticais (€7.107 billion), corresponding to 33.2% of GDP, generating a budget deficit of 8.2%.
PVJ/ADB // ADB.
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