Mozambique's Budget Monitoring Forum (FMO), a coalition of local non-governmental organisations, is calling on the government to adopt a formal Debt Management Strategy, warning that the proposed 2027 State Budget leaves insufficient room for development investment due to the rising burden of public debt service.
The position is set out in the forum's analysis of the 2027 Economic and Social Plan and State Budget (PESOE), which proposes total expenditure of approximately 496.6 billion meticais. Of that amount, 72.5% is allocated to recurrent spending, 16% to investment, and 11.5% to financial operations.
According to the FMO, the government plans to spend 50.2 billion meticais on interest payments and 48.6 billion meticais on debt amortisation, bringing total debt service to 98.9 billion meticais — equivalent to approximately 5.4% of gross domestic product (GDP).
By comparison, public investment expenditure is estimated at 79.5 billion meticais, or around 4.4% of GDP. As a result, debt service is projected to exceed public investment by approximately 24% in 2027.
For the FMO, this gap illustrates the pressure that debt obligations are placing on public finances, constraining resources available for infrastructure, health, education, water, agriculture, and broader economic development.
The organisation acknowledges the need for fiscal discipline to restore budgetary space, but argues that consolidation efforts must be accompanied by the protection of social sectors — particularly health, education, social protection, water and sanitation, agriculture, and youth employment.
The FMO further warns that only around 16 in every 100 meticais of public expenditure will be directed towards investment. In this context, it argues that the government needs to explain how the budget structure will finance the economic and social transformation objectives set out in the PESOE.
To reverse this trend, the forum recommends the development of a Debt Management Strategy aligned with national development priorities. The document should outline the projected trajectory of debt service costs, the composition of domestic and external debt, and the associated costs and risks.
Source: Diário Económico
Original article: https://www.diarioeconomico.co.mz/2026/09/30/economia/financas/fmo-pede-estrategia-de-gestao-da-divida-para-proteger-investimento-publico/
