Banco de Moçambique (BdM) has assessed the country’s sovereign risk as remaining at a ‘severe’ level in 2025, driven by sustained growth in domestic public debt. According to the central bank’s 2025 Financial Stability Report, cited by Lusa, the domestic debt stock rose 16.5% over the year, climbing from more than €5 billion in 2024 to €6.5 billion in 2025.
The report identifies public debt as one of the principal vulnerabilities of the national financial system, noting that the increase in pressure was driven primarily by the domestic component of the debt, as the state relied heavily on Treasury Bonds and Treasury Bills to meet its financing needs.
The central bank also warned that payment arrears by the state had eroded investor confidence in sovereign securities and contributed to rigidity in interest rates on the interbank market.
In a stress test conducted with projections through 2027, BdM concluded that ‘high exposure to sovereign assets represents the most significant challenge to the capitalisation of the financial sector’, flagging risks stemming from the strong link between the banking system and public debt.
Despite this backdrop, the overall systemic risk index declined to 29.86%, remaining at a level considered moderate.
In an assessment published in May, following a meeting of the Monetary Policy Committee (CPMO), the central bank stated that ‘public indebtedness and domestic and external debt arrears remain elevated, affecting the normal functioning of the financial market and banking liquidity’.
On that occasion, BdM indicated that domestic public debt — excluding mutual and lease contracts as well as overdue liabilities — had risen to €6.5 billion, representing an increase of €248.7 million compared with December 2024.
‘Arrears in the payment of domestic and external public debt persist, including with national financial institutions and multilateral creditors, with impacts that include weak demand for public securities, rigidity in interbank money market interest rates, and the country’s risk assessment,’ the document stated.
Source: Diário Económico
Original article: https://www.diarioeconomico.co.mz/2026/07/08/economia/bdm-risco-soberano-do-pais-em-nivel-severo-em-2025/
