Now Reading
IMF Admits “Complicated Situation” as Mozambique’s Domestic Debt Soars

IMF Admits “Complicated Situation” as Mozambique’s Domestic Debt Soars

The International Monetary Fund (IMF) representative in Mozambique said on Thursday that the domestic debt situation in the country was “somewhat complicated”, noting that it was issuing domestic debt to pay off the external debt, which is negative.

“We have a drop in external financing which now, both this year and next year, is and will be negative. In other words, it’s necessary to issue domestic debt to pay off foreign debt. So it’s a rather difficult cyclical situation,” Alexis Meyer told the media on the sidelines of a seminar on “Resilient Mozambique, Recent Milestones in Fiscal and Financial Capacity Development”, organised by the IMF in Maputo.

According to the IMF representative, the external debt challenges are not only affecting Mozambique. Other countries in the southern African region are facing the same dilemma, which is the result of the international climate.

“External financing has been decreasing not only in Mozambique but in the region as a whole (…) This contributes very strongly to the need to bring in domestic banking resources in order to finance the budget,” he added.

The Mozambican state closed the first and third quarters with a public debt of 971.788 billion meticais (€14.252 billion), an increase of 5.1% compared to the end of 2022, according to official figures.

“This worsening was largely influenced by the evolution of domestic debt, in a context of relative stabilisation of external debt,” reads the report on the economic and social balance of the implementation of the State Budget from January to September 2023, to which Lusa had access today.

In the document, the Ministry of Economy and Finance stated that external debt remained practically unchanged until September, at 643.491 billion meticais (€9.434 billion), while domestic debt grew by 16% compared to December, reaching 328.296 billion meticais (€4.813 billion) at the end of September.

“Measures are being implemented to reduce the cost of new loans while at the same time improving measures to manage the portfolio of existing loans,” says the report.

It adds that the measures focus on “strengthening the rigour of the criteria for selecting and prioritising projects to be financed using concessional credits and maximising the use of multilateral and bilateral financing windows in the form of grants”.

“In contracting internal financing, the government has been favouring extending the maturity of the debt and reducing the interest rate in line with the current Public Debt Management strategy with the entry of institutional investors (Pension Funds and Insurance Companies),” it added.

Lusa

SUBSCRIBE TO GET OUR NEWSLETTERS:

See Also

SUBSCRIBE TO GET OUR NEWSLETTERS:

Scroll To Top

We have detected that you are using AdBlock Plus or other adblocking software which is causing you to not be able to view 360 Mozambique in its entirety.

Please add www.360mozambique.com to your adblocker’s whitelist or disable it by refreshing afterwards so you can view the site.