Interest rates on Mozambique’s sovereign debt traded abroad have fallen to their lowest level since 2022, in line with the expected resumption of investment in liquefied natural gas (LNG). Fitch Ratings speaks of a “positive moment” for Sub-Saharan Africa.
Mozambican public debt securities traded internationally — a legacy of the so-called “hidden debts” — represent only a portion of the State’s total debt, most of which is held domestically. However, their pricing serves as a barometer of perceptions about the country’s economy, and recent signals have been positive: the yields demanded by investors on Mozambique’s public debt maturing in 2031 fell in late October to 11.09%, the lowest level since 2022. In practice, such a movement reflects growing investor confidence.
According to financial information agency Bloomberg, Mozambique’s 2031 bonds appreciated after Eni approved the second floating platform project (Coral Norte) for LNG exports and after TotalEnergies signalled it is ready to resume work on the onshore LNG processing and export project in Afungi — which may soon be followed by a similar announcement from ExxonMobil. A 2024 study by consultancy Deloitte estimated that Mozambique’s gas reserves represent potential revenues of USD 100 billion (EUR 86.2 billion), making it unsurprising that global attention is focused on these ventures.
Alvarez & Marsal to Curb Domestic Debt
However, as Mozambique’s central bank governor, Rogério Zandamela, warned in September, the country’s public debt cannot continue to grow domestically, and the Government is expected to take measures to contain it. “If it continues to grow to the point of reaching worrying levels of unsustainability, it could cause problems,” he cautioned, pointing to figures showing an increase in domestic debt compared to December 2024, reaching a record 1.072 trillion meticais in June.
The Mozambican Government projects a fiscal deficit of over 6% of Gross Domestic Product (GDP) in 2026, identifying “control of the wage bill” and “stabilisation of the State’s debt servicing costs” as priorities. In this context, the Government has hired consultancy Alvarez & Marsal to “support the preparation of a public debt restructuring plan” for Mozambique, according to a decision by the Council of Ministers reported by Lusa.
The international consultancy was contracted through a direct award and is tasked with developing a plan “aligned with the Government’s objectives of ensuring fiscal consolidation in the short and medium term,” as well as “providing support in drafting the 2026–2029 Public Debt Strategy.” Alvarez & Marsal is described as a firm specialising in recovery and performance improvement, with past interventions including Lehman Brothers and Warnaco.
IMF Macroeconomic Forecasts
The International Monetary Fund (IMF) maintained its growth forecast for Mozambique’s economy this year (2.5%) in its latest World Economic Outlook report, released during the IMF and World Bank Annual Meetings held in Washington in October — weeks before President Daniel Chapo’s visit to the United States.
“The average credit ratings in Sub-Saharan Africa improved slightly over the past 12 months, despite volatility in the global economy.”
“In Sub-Saharan Africa, growth is expected to remain moderate, unchanged in 2025 at 4.1%, the same level recorded in 2024, before accelerating to 4.4% in 2026,” the report states. The figures for Sub-Saharan Africa — the region that includes most Portuguese-speaking African countries — show “an upward revision compared to the April 2025 forecast, with a cumulative increase of 0.5 percentage points.”
Looking at the tables of forecasts for key economic indicators in the Portuguese-Speaking African Countries (PALOP), the outlook is mixed. Cape Verde and Equatorial Guinea show improved forecasts, although in the latter case the improvement is insufficient to lift the country out of economic recession. Angola and São Tomé and Príncipe, on the other hand, see deteriorating forecasts, while growth projections for Guinea-Bissau and Mozambique remain unchanged.
Where Is the Window of Opportunity?
Credit rating agency Fitch Ratings believes that reform momentum and the international trade environment underpin a positive moment for Sub-Saharan African countries, despite the challenges facing these economies. “Reform momentum and improving trade terms in many Sub-Saharan African countries are helping to offset a volatile external environment and reduced external assistance,” Fitch analysts note in an assessment of the region’s economic outlook, which includes most Portuguese-speaking countries.
According to Fitch, “average growth is stable, with the region largely insulated from U.S. tariff changes, inflation declining due to greater exchange rate stability — allowing for cuts in domestic interest rates, which remain high — and strong growth driving imports.” The average credit ratings in Sub-Saharan Africa have improved slightly over the past 12 months, despite volatility in the global economy, the analysts add.
Text: Editorial Team • Photo: D.R.
