Maputo, June 30, 2025 (Lusa) - Mozambique’s sovereign risk remained at an “acute” level in 2024, according to a central bank report that Lusa consulted today, which predicts the risk will persist given the “pressure” of public debt.
“In 2024, sovereign risk remained at an acute level. The financial stability report from the Bank of Mozambique attributes this persistent level to the maintenance of the ratio of government credit to total credit and the ratio of public debt to GDP [Gross Domestic Product] at high levels.”
Sovereign risk refers to the risk that a government will be unable to meet its financial obligations.
According to the document, Mozambique ended 2024 with total public debt of more than $16.328 billion (€13.931bn), compared to $15.202 billion (€12.970 billion) in 2023.
“The report notes that sovereign risk is expected to remain severe, due to pressure on domestic public debt, which continues to worsen.”
It adds that “systemic risk in the banking sector remains at a moderate level, a behaviour influenced by the persistence of sovereign, credit, liquidity, and profitability and solvency risks.”
“Contrary to this trend, there has been an increase in macroeconomic risk and a reduction in market risk,” the document also points out.
Finance Minister Carla Loveira said on 16 June that Mozambique’s economic and financial scenario remains “resilient”, acknowledging the impact of post-election social tension in the first quarter of the year.
Speaking at a Bank of Mozambique event in Maputo, the minister recalled that “in recent years” the country’s macroeconomic management has addressed “challenges arising from external and internal shocks that deeply affect” the economy, such as terrorism in Cabo Delgado, extreme weather events and “violent demonstrations” after the general elections on 9 October.
These culminated in the “destruction of public and private infrastructure, which led to a slowdown in the economy of 3.6 percentage points in 2024, standing at 1.9% against the 5.5% projected in the PESOE [Economic and Social Plan and State Budget] for that year. We confirmed this situation in the first quarter of 2025, with GDP showing a 3.9% reduction compared to the same period in 2024, influenced by reductions of 16.2% in the secondary sector and 8% in the tertiary sector,” added Carla Loveira.
‘This shows that the context remains demanding and it was in this context that Parliament approved the PESOE for 2025 (…) [which] points to fiscal consolidation as the primary objective for balancing the State’s accounts.’ In this context, the minister also stressed that the government approved policy measures to increase efficiency in revenue collection, stabilise the level of public debt concerning the wage bill, and facilitate a lower primary deficit, thereby creating space for productive investment.”
The Mozambican economy recorded a 3.92% contraction in the first quarter, year-on-year, after posting a 5.73% decline in the last three months of 2024, the National Statistics Institute (INE) announced in June.
Mozambique’s gross domestic product (GDP) grew by 3.56% in the first quarter of 2024, followed by further increases of 4.28% and 5.53% in the second and third quarters, respectively. For 2025, the government forecasts a 2.9% growth rate.
Following the social unrest that occurred after the general elections on 9 October, the GDP rose by 5.73 percentage points in the last quarter and by 3.92 percentage points in the first quarter of 2025, according to INE.
PVJ // SB
Lusa/Fim
