Maputo, March 30, 2026 (Lusa)- The Bank of Mozambique has warned that internally issued public debt has tripled since 2020, reaching 487.266 million meticais (€6.627 billion), saying that this debt now accounts for nearly 30% of the nation's Gross Domestic Product (GDP).
According to the Economic Outlook and Inflation Forecasts report released on Monday by the Bank of Mozambique, domestic public indebtedness has continued to deteriorate, saying that this trend is negatively influencing the functioning of the financial market.
According to the document seen by Lusa, total domestic public debt, comprising Treasury Bills (BT), Treasury Bonds (OT), and central bank advances to the State, stood at 155.973 million meticais (€2.121 billion) in December 2020, representing 14.7% of GDP at the time. Since then, debt has risen consistently in both absolute terms and as a percentage of GDP, reaching its current level of 29.4%.
The central bank said that delays in meeting obligations associated with domestic public debt instruments, particularly OT, had led to a decreased appetite for new investments in government securities, and this situation has maintained a level of rigidity in interest rates within the interbank money market.
According to the document, the state has paid interest rates of 12.07%, 12.16% and 12.25% for BT maturities of 91, 182 and 364 days, respectively, saying that these rates remained virtually unchanged throughout the first quarter, fundamentally reflecting the perception of high fiscal risk among commercial banks.
On the other hand, the central bank said that between January and March 2026, the State had held OT swap auctions for three-year maturities, with the weighted average interest rate standing at 13.50%, identical to the previous one.
Mozambique has carried out a series of OT debt swap operations which credit rating agency Standard & Poor's (S&P) classified as a ‘selective default’ in its latest assessment on 27 March.
This rating for domestic issues therefore remains at ‘SD’ (selective default), due to defaults and domestic debt swaps considered to be default operations, according to the agency.
According to previous reports from Lusa, by the end of 2025, Mozambique had accumulated arrears of nearly 4.66 million meticais (€63.2 million), due to liquidity constraints.
A report from the Ministry of Finance concerning the evolution of Mozambique’s public debt in 2025 said that the accumulation of these arrears resulted primarily from constraints on revenue mobilisation, occurring against a backdrop of economic slowdown and pressure on the Treasury’s liquidity.
It is also explained that, as part of “liability management operations”, five swap auctions were held for Treasury Bonds – domestic issues with longer maturities – maturing in 2025: ‘The swap auctions held in March, May, September and December 2025 alleviated debt service pressure by 30.64 billion meticais [€415.3 million], extending maturities and reducing risks’.
The International Monetary Fund (IMF) said in the regular assessment of Mozambique, concluded in February 2025, that Mozambique's public debt remained unsustainable.
‘Mozambique’s external debt is assessed as being at high risk of default, whilst its overall debt is assessed as being in a critical situation. The debt is currently considered unsustainable, mainly due to the political unfeasibility of a comprehensive adjustment that could potentially safeguard debt sustainability,’ the IMF notes in this assessment.
PVJ/MYAL // AYLS
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