Maputo, Nov. 19, 2024 (Lusa) - Mozambique's public debt costs grew by 6.4% in the first nine months of the year, compared to the same period in 2023, to 42,428 million meticais (€628 million), according to official figures.
According to the Ministry of the Economy and Finance's budget execution report up to the end of the third quarter, debt charges, including interest, represented 78.3% of the total budgeted for 2024.
Interest payments on domestic debt alone totalled more than 29,383 million meticais (€435 million), equivalent to 78.1% of the annual budget, a reduction of 2.3 percentage points compared to the same period in 2023.
External interest, on the other hand, totalled more than 10,817 million meticais (€160.2 million), corresponding to a realisation of 75.7% of the total budgeted for 2024, in this case a year-on-year increase of 16.8%.
Lusa reported this month that Mozambique's debt stock reached 396,056 million meticais (€5.7 billion) at the end of September, up 26% on the end of 2023, according to budget execution data.
According to the budget execution from January to September, this ‘stock’ compares with 313.78 billion meticais (€4.516 billion) on 31 December 2023 and is mainly the result of new issues of Treasury Bills (BT, shorter maturities) and Treasury Bonds (OT, longer maturities) totalling 209.833 billion meticais (€3.020 billion) in nine months.
On the other hand, in the same period the Mozambican state amortised its domestic public debt to the value of 127,557 million meticais (€1.836 billion), in this case mainly BT.
"With regard to the amortisation of domestic debt, in addition to the amount relating to the payment of Treasury Bonds and Bank Financing, the sum of 537.8 million meticais [€7.7 million] was also disbursed relating to the payment of debts with suppliers of goods and services from previous years, as part of the Fiscal Restructuring and Consolidation," the report details.
At the end of September, the accumulated stock of public debt totalled 1.04 trillion meticais (€15 billion), of which almost 648,883 million meticais ( €9.340 billion) was external debt, a slight reduction compared to last December.
In July, the International Monetary Fund (IMF) expressed concern about Mozambique's dependence on issuing short-term public debt, as it increases the country's ‘financing risks’.
"The extensive reliance on short-term domestic debt in recent years has increased refinancing risks for the government. Domestic debt increased from 19 % of GDP in 2019 to a peak of around 28% of GDP in 2022," points out the IMF in the report of the fourth evaluation of the Extended Credit Facility (ECF) programme, concluded in July.
Although medium-term debt "has the largest share in domestic debt", equivalent to 50% of the total last year, the IMF also points out that "short-term debt increased from 19 to 27% of total domestic debt between 2019 and 2023".
"In a context of rising yields" on sovereign debt, the IMF said that the Mozambican authorities "have been reluctant to accept higher yields on long-term domestic debt", which is reflected "in the bid ratios of Treasury Bond auctions that often fall below 100%, with the average ratio for April and May 2024 at 62%".
"The spread of Treasury bill rates [shorter maturities] over the monetary policy rate has also increased over the past year, rising from around 50 basis points [for one-year maturities] at the beginning of 2023, to over 200 basis points in April 2024," the report reads.
PVJ/AYLS // AYLS
Lusa
