The Ministry of Finance announced that the Government plans to conduct five domestic debt swap auctions this year, totaling nearly 26.2 billion meticals (406.4 million USD).
According to a document on the “situation of Mozambique’s public debt,” the debt swap auction method was introduced as part of the reform measures recommended by the Medium-Term Debt Management Strategy for the period 2022-2025.
“This is one of the liability management operations, implemented to improve the profile of public debt. Five debt swap operations have been identified for this year, with the first already completed in March and another scheduled for May,” it clarified.
According to the Ministry of Finance, five similar debt swap operations are also planned for 2026, totaling 37.3 billion meticals (578.6 million USD), and three in 2027, worth 14.5 billion meticals (224.9 million USD).
The commencement of the review of the Treasury Bonds Legal Framework is also highlighted, “strengthening public debt management instruments to develop the Capital Market, promoting greater efficiency in the management of State liabilities.”
In March, the financial rating agency Standard & Poor’s (S&P) downgraded the country’s internal debt rating to Selective Default (SD), citing delays in payments to creditors and the restructuring of a bond issuance.
According to S&P, the decision was prompted by the recent debt swap of 3.7 billion meticals (54 million USD) in internal debt securities, which were due to mature in March 2025, for new securities with extended maturity until 2030 and a lower interest rate.
At the time, the agency stated that this operation reflects the country’s fiscal and liquidity constraints, warning that “the continued use of such liability management operations, coupled with a history of delays in internal debt payments, demonstrates the fragile financial capacity of the government.”
The agency warned of increasing risks to the sustainability of public finances, mentioning potential delays in major natural gas projects and uncertainties in external financing, factors that could increase pressure on the country’s liquidity.
