Mozambique’s debt interest surged by 12% to 57.608 billion meticais in 2024, with domestic debt rising 13% and external debt up by 9.5%. Public debt exceeded one billion meticais and increased by 9% over the year. Concerns regarding the sustainability of domestic debt growth have been raised, especially with rising interest rates impacting financing costs.
Mozambique’s debt interest costs increased by 12% in 2024, reaching 57.608 billion meticais (€857.4 million), as reported by official figures accessed by Lusa. This represents a jump from the previous year’s interest payments of 49.929 billion meticais (€743 million). Of this total, domestic debt interest surged by 13% to over 45.691 billion meticais (€680 million), while external debt interest rose 9.5% to nearly 11.395 billion meticais (€177.6 million).
The latest reports indicate that the public debt stock in Mozambique surpassed one billion meticais (€15.8 billion) in 2024, marking a 9% rise within the year. The total debt reached approximately 1.069 billion meticais by December 2024, with domestic and external debts recorded at over 407.085 billion meticais (€6.139 million) and 636.548 billion meticais (€9.6 billion), respectively.
Additionally, the external debt saw a modest increase of 1.4%, attributed to updates from the migration to a new debt management system, while domestic debt ballooned by 21.8%, fueled by significant short-term Treasury Bill issuances and a Credit Facility with the central bank. The Ministry of Economy and Finance’s report from April 2023 had already raised concerns regarding the rapid growth of domestic debt.
The report warned that if the current growth trend persists over the next five years, the debt profile could trend towards a 50% domestic and 50% foreign balance by 2029, presenting potential risks for debt sustainability. Furthermore, rising interest rates on government securities have resulted in increased costs for domestic financing, elevating the average interest rate on the government’s loans from 5% in 2021 to 6.5% in 2023, signaling a compounded increase that raises refinancing risks for public debt.
In summary, Mozambique faces significant challenges with its rising debt obligations, particularly in domestic debt, which has increased substantially. The government’s reports reflect growing concerns over sustainability, highlighting the risk of a balanced debt portfolio that could complicate financial stability. Rising interest rates further exacerbate these issues, underscoring the critical need for effective debt management strategies moving forward.
Original Source: clubofmozambique.com
