Mozambique’s debt interest costs rose 12% in 2024, totaling €857.4 million. Domestic debt surged by 13%, while external debt interest payments grew by 9.5%. The country’s public debt exceeded €15.8 billion, with alarming trends indicating risks of unsustainable growth due to increasing domestic borrowing.
Mozambique’s interest expenses on its debt increased by 12% in 2024, reaching 57.608 billion meticais (€857.4 million), as reported by Lusa. This reflects a rise from 49.929 billion meticais (€743 million) spent on debt servicing in 2023. Notably, interest on domestic debt soared by 13% to over 45.691 billion meticais (€680 million), while external debt interest payments climbed to nearly 11.395 billion meticais (€177.6 million), marking a 9.5% increase over the previous year.
The public debt of Mozambique surpassed 1 billion meticais (€15.8 billion) in 2024, illustrating a 9% annual growth. By the end of December 2024, the domestic debt stock totaled over 407.085 billion meticais (€6,139 million), and the external debt stock rose to 636.548 billion meticais (€9,600 million). Furthermore, external debt saw a 1.4% rise, largely attributed to adjustments linked to the newer debt management system, ‘Meridian’.
Domestic debt experienced a 21.8% increase primarily due to the issuance of Treasury Bills worth 46.162 billion meticais (€696.2 million) and a Credit Facility with the central bank amounting to 28.1 billion meticais (€423.8 million). Earlier in April, the 2023 public debt report by the Mozambican Ministry of Economy and Finance expressed concerns about the rapid growth of domestic debt, underscoring a potential future imbalance between domestic and foreign debt.
The report cautioned that if current domestic debt growth persists over the next five years, the composition of the debt portfolio could shift to a 50% domestic and 50% foreign ratio by 2029. This scenario would undermine efforts to stabilize the situation, particularly as interest rates for Treasury Bills have risen significantly, with the weighted average interest rate on government loans escalating from 5% in 2021 to 6.5% in 2023, a total increase of 150 basis points. Moreover, the report highlighted the refinancing risk posed by short-term maturity concentration, which remains a critical vulnerability.
In summary, Mozambique’s debt interest payments have significantly surged, raising concerns over domestic debt sustainability. With domestic debt rising faster than foreign debt, there is a looming risk of an unfavorable balance potentially detrimental to the country’s fiscal stability. Continued monitoring and strategic debt management will be essential to address these challenges and mitigate refinancing risks in the future.
Original Source: clubofmozambique.com
