Iraq has forgiven 256 million dollars (16.3 billion meticals) of the oil debt that Mozambique had been accumulating for decades, since 1979 and 1980, the Bloomberg news agency reported on Wednesday 12 February, citing the Finance Ministry.
According to the agency, the country owed Iraq a total of 320.2 million dollars (20.4 billion meticals) and will pay the remaining balance of 64 million dollars (4.1 billion meticals) over 15 years, starting in 2029.
Mozambique, which is rich in natural gas, has been struggling with an increasingly heavy debt. On 7 February, Fitch Ratings downgraded the country’s foreign currency credit rating from CCC+ to CCC, saying that unresolved political and social unrest affected state revenues at a time when financing needs were high and there was uncertainty about external financing.
At the end of January, the Bank of Mozambique (BoM) reported that the country’s domestic public debt increased significantly over the course of 2024, totalling around 325 million dollars (20.7 billion meticals) compared to the previous year. According to a statement issued after the Monetary Policy Committee (CPMO) meeting, the country’s domestic debt, excluding loan contracts, leases and outstanding liabilities, totalled 7.3 billion dollars (466.4 billion meticals).
The BoM warned that this increase reflects the growing pressure on public finances. The statement emphasises the need for measures to contain indebtedness, in an economic context that remains challenging.
On the other hand, the Ministry of Finance pledged its commitment to honouring its financial commitments, while implementing reforms to reduce the public debt burden. Among the initiatives underway, the government announced the introduction of debt exchange auctions and new issuance instruments to boost the secondary market, increasing the participation of institutional investors, families and individuals.
