As of September, the State had resorted to 29.1 billion meticais ($419.6 million) in loans granted by the Bank of Mozambique (BdM) to cover treasury needs, according to official data from the Ministry of Finance, reported by Lusa.
This information appears in the latest budget execution report, which records the mobilization of 107 short-term credit operations, complemented by $402.1 million in Treasury Bill issuances.
In addition to these instruments, the central bank also provides direct loans under Article 18 of its Organic Law, which allows the granting of interest-free credit to the State under certain conditions.
Under the law, BdM, as the State’s banker, can annually provide interest-free credit in national currency up to a limit of 10% of ordinary revenues collected in the penultimate fiscal year. These amounts are made available through a current account and must be repaid by the last day of the respective fiscal year. If not repaid, the outstanding balance begins to accrue interest at the rediscount rate.
The use of this type of financing is part of efforts to cover the State Budget’s treasury deficit, a key component of domestic debt management that has been growing in recent years.
According to the report, the Government expects the nominal budget deficit to fall to $1.6 billion in 2026, the lowest level in recent years, representing 6.9% of Gross Domestic Product (GDP).
This compares with an estimated deficit of $1.8 billion in 2025, equivalent to 8.2% of GDP, and $2.3 billion recorded in 2024.
The projected reduction comes amid expectations of a gradual recovery of the national economy, with the Government anticipating economic growth of 3.2% in 2026, following the 2.9% forecast for this year and the 2.2% recorded in 2024, the latter affected by post-election political instability.
This recourse to the central bank aligns with a growing trend of direct domestic financing of the State, at a time when BdM’s credit to the Treasury rose 52% in 2024, exceeding $1.5 billion.
Pressure on public treasury remains high, with the Government recently setting the Treasury Bill issuance limit at nearly $7 billion and warning of increased fiscal risks due to an accumulated deficit exceeding $320 million in the second quarter. Nevertheless, a slight decline in public debt was recorded in the third quarter, indicating efforts to rebalance accounts amid a context of budgetary adjustment.
