Maputo, March 12, 2025 (Lusa) - On Tuesday, the Mozambican state exchanged a 2021 domestic issue for a new one, totalling more than 3.694 billion meticais (€52.9 million), in the first operation of the year, according to information consulted by Lusa on Wednesday.
According to information from the Mozambique Stock Exchange (BVM), the maximum limit for this exchange of domestic debt was 5.2 billion meticais (€74.5 million), so the operation didn't reach that amount.
According to the BVM, "the overall demand for the issue" in the bids submitted by the Specialised Treasury Bond Operators was 3.744.2 billion meticais (€54.1 million), with a demand and supply ratio of 72%, including 71.04% in demand for the exchange of Treasury Bonds and 0.96% in new allocations.
"Having been allocated the total demand," explains BVM, the value of the issue corresponded to 3,694,208,500 meticais (€52.9 million), equivalent to 98.66% of the total, for the exchange of OT 2021 - third series for OT 2025 - first series, and 50 million meticais (€716,600) in new allocations.
This was Mozambique's first treasury bond issue this year.
Lusa reported this month that interest costs on Mozambique's debt grew by 12% in 2024, compared to the previous year, to 57.608 billion meticais (€857.4 million).
According to data from the Ministry of Finance, this amount compares with the 49.929 billion meticais (€743 million) that the state spent on the so-called debt burden in 2023.
The interest payment component of the domestic debt alone grew by 13% in 2024, to more than 45.691 billion meticais (€680 million). Meanwhile, the state spent almost 11.395 billion meticais (€177.6 million) on interest on the external debt, an increase of 9.5% in a year.
Mozambique's public debt exceeded one trillion meticais (15.8 billion euros) in 2024, an increase of 9% in one year.
According to information on last year's budget execution, the Mozambican state's debt grew from January to December to almost 1.069 trillion meticais.
As of 31 December, domestic debt totalled more than 407.085 billion meticais (€6.139 billion), while external debt exceeded 636.548 billion meticais (€9.6 billion).
According to the document, external debt increased by 1.4% in 2024, while domestic debt increased by 21.8%, "mainly due to the issue of short-term debt through Treasury Bills", worth 46.162.9 billion meticais (€696.2 million).
The Mozambican Ministry of Economy and Finance's 2023 public debt report warned in April last year of the pace of growth of domestic debt, which, if it continues, threatens the process of reversing its unsustainability.
"If domestic debt continues to grow at the current rate over the next five years, the breakdown of the "stock" could balance out at 50% domestic/50% external by 2029, with a portfolio dominated by purely commercial instruments, a scenario that would jeopardise the chances of reversing the unsustainability of the debt in this generation," the document said.
As interest rates on Treasury Bills (BT, short maturities) and Treasury Operations (OT, longer maturities) "have risen, the cost of domestic financing has driven a continuous upward adjustment in the weighted average interest rate of the government's loan portfolio," it added.
The rate went from "5% in 2021 to 5.8% in 2022 and now 6.5% in 2023, totalling a cumulative increase of 150 basis points in two years," added the report, which also warned that the "refinancing risk, reflected in the growing concentration of maturities" of public debt "in the short-term horizon, represents the greatest vulnerability."
PVJ/ADB // ADB.
Lusa
