Maputo, July 11, 2025 (Lusa) - The government of Mozambique expects debt payments to continue to “put pressure on public finances,” but “with a downward trend” until 2028, while highlighting the opportunity to manage emerging risks.
‘The reduction in interest charges, loan repayments to the Central Bank and Treasury Bond repayments will contribute to easing the domestic debt service, as the largest commitments may reach maturity during this period,’ reads the Medium-Term Fiscal Scenario (CFMP).
The report also points out that, in terms of external debt, “debt servicing is projected to remain relatively stable until 2028, with an increase expected from the start of repayments [of the issue] of ‘eurobonds’” (debt denominated in euros).
The cabinet approved the document on 24 June, stating that public debt, including contingent liabilities, rose from 73% of Gross Domestic Product (GDP) in 2023 to 76.9% in 2024, remaining "above the recommended sustainability threshold" of 60% for low-income economies.
“Associated with this, the upward trajectory of domestic debt, which reached 26% of GDP last year, increases pressure on public accounts, since debt servicing consumes a growing share of state revenue,” it stresses.
The document warns: “A likely depreciation of the exchange rate in the medium term could be a source of risk for public debt, as small exchange rate variations could impact the stock of public debt, given that a large part of the portfolio is composed of foreign currency.”
According to data from the Bank of Mozambique, the country ended 2024 with total public debt of over $16.3 billion (€13.9 billion), compared to $15.2 billion (€13 billion) in 2023.
The government acknowledges in the CFMP that financial charges represented around 4.6% of GDP in 2024, “driven by the high debt stock and rising global interest rates” and that in 2025 they should remain “around 4.0% of GDP, reflecting the persistent cost of debt servicing”.
“Between 2026 and 2028, analysts project a moderate reduction in these charges, reaching around 3.4% of GDP in 2028, due to the growth of debt to finance public investment from external (concessional) sources,” it added.
In public debt management, the government envisages a strategy “anchored in sustainability” and “efficiency in the management of risks associated with its servicing”, implementing “priority” actions, such as the adoption of a “prudent resource mobilisation strategy, with an emphasis on prioritising concessionality and diversifying sources of financing”, “active debt portfolio management” including operations to “reduce the average cost” and “improve the payment profile”.
Also, “strengthening transparency and public debt reporting through the integration of centralised data and strengthening institutional capacities for analysis and monitoring”.
“These measures aim to ensure fiscal sustainability, mitigate financial risks and strengthen the confidence of development partners, contributing to macroeconomic stability and alignment with the country’s strategic priorities,” it points out.
PVJ/ADB // ADB.
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