The Bank of Mozambique (BdM) has warned that domestic public debt recorded a significant increase of more than 38.5 billion meticais ($610 million) in the first half of 2025, heightening pressure on the country’s public finances.
According to a statement issued after the Monetary Policy Committee (CPMO) meeting held on Thursday (July 31) in Maputo, domestic debt—excluding loan contracts, leases, and overdue liabilities—stood at 454.3 billion meticais ($7.1 billion), marking an increase of 38.7 billion meticais ($610 million) compared to December 2024.
BdM Governor Rogério Zandamela emphasized that the rise in debt is directly linked to difficulties in securing resources for the State Budget. However, he stressed that the central bank is not responsible for issuing debt securities or defining the debt strategy—these tasks fall under the remit of other government entities.
Recent government reports indicate that the increase in domestic debt stock has heightened the risk associated with interest rate fluctuations, potentially leading to a substantial impact on debt servicing. It is estimated that in September 2025 alone, the country will have to disburse approximately 20 billion meticais ($317 million) in principal and interest payments—the highest amount projected for the year.
The Medium-Term Fiscal Framework (CFMP) for 2026 to 2028 suggests that the concentration of payments in specific periods may place additional pressure on the public treasury, necessitating constant monitoring. The document further notes that servicing domestic debt has become a substantial burden on public expenditure, due to the growing reliance on internal borrowing, limited access to concessional external credit, and the need to finance the budget deficit.
In the first quarter of 2025, the refinancing of short-term domestic debt cost approximately 1.2 billion meticais ($19 million)—a figure the Ministry of Finance considers inefficient, as the operation has involved more onerous terms and contributed to the increase in debt stock.
Moreover, the Ministry of Finance report acknowledges that domestic debt, which stood at 443.2 billion meticais ($7 billion) at the end of March, was worsened by the issuance of debt through advances under the Central Bank’s Credit Facility, amounting to 21.6 billion meticais ($342 million)—a 23.8% increase.
This scenario highlights the growing complexity of managing Mozambique’s domestic public debt and underscores the need for a sustainable strategy to avoid further pressure on state finances.
Source: Lusa
