Maputo, May 12, 2025 (Lusa) - Mozambique's public debt rose 26.2% in five years, ending 2024 at a record US$16.238 billion (€14.43 billion), the Finance Ministry announced, warning of the continued growth of domestic debt.
"This increase was largely driven by the rapid growth of domestic debt, resulting from the financing of the Treasury deficit after international partners froze their support for the State Budget. The central government's debt remains predominantly composed of external debt, which represents 61% of the total, while the remaining 39% corresponds to domestic debt," according to the 2024 public debt report, which Lusa read on Monday.
The document "highlights Mozambique's fiscal adjustment path and progress in debt management, however, the growing dependence on domestic financing and the pressure of debt servicing on the State treasury pose additional challenges to fiscal sustainability."
According to a report from the Ministry of Finance, the public debt was US$12.935 billion (€11.5 billion) in 2020 and grew by 7.9% in 2024 compared to the previous year.
"This growth was driven by domestic debt, through the issuance of Treasury Bills and financing through the Central Bank, with an increase of 29.7% and representing 39% of the total stock, revealing a growing dependence on domestic financing," the document warns.
According to the same source, total external debt fell by 2.6% in 2024, "influenced by debt relief to Iraq, as well as data adjustments" resulting from the migration from the old debt management system, CS-DRMS, to the new MERIDIAN system.
On the other hand, the report points out that the "current debt portfolio remains exposed to a high refinancing risk" and that last year alone, 22.0% of the total debt portfolio "matured in one year" and 47.7% of total domestic debt "had to be refinanced in 2024, while external debt was only 5.6%.
"The cost-risk analysis shows that, in 2024, the total fixed-rate debt portfolio was 89.5%. The data also show that the risk is higher in domestic debt due to its short maturity structure, with 60.9% of the total sensitive to changes in interest rates in one year. Similarly, the total debt portfolio is exposed to high exchange rate risk, given that 61.0% consists of instruments indexed to the exchange rate," it is emphasised.
The report also recalls that in 2024 the Mozambican State reached an out-of-court settlement involving Credit Suisse and the Privinvest group in the High Court of London, "which reduced the State's exposure to Undisclosed Debts from $1.4 billion to $220 million" (€1.245 billion to €195.5 million).
The document explains that this amount corresponds to "an 84% reduction in the total claimed by the banks, of which about 66% corresponds to the capital component", and "in return," Mozambique will receive compensation of over $825 million (€733.2 million).
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