The Ministry of Economy and Finance (MEF) forecasts that domestic debt servicing will continue to have a significant weight in 2025, representing 65 per cent of total debt servicing, which is equivalent to around 90.3 billion meticals (1.4 billion dollars). This information is contained in a recent report on fiscal risks for 2025, reported in the newspaper Noticias.
The document also reveals that external debt servicing should account for the remaining 35 per cent of the total. The projections indicate that, over the last few years, both domestic and foreign debt have fluctuated, and this behaviour is expected to continue over the next few years.
In 2023, domestic debt servicing accounted for 68 per cent of the total, while external debt stood at 32 per cent. For 2024, forecasts point to a partial change, with domestic debt falling to 58 per cent and external debt rising to 42 per cent.
According to the MEF’s projections, domestic debt should start to fall gradually, from 65 per cent in 2025 to 61 per cent in 2026, while external debt should increase to 39 per cent. In 2027, a more pronounced change is expected, with domestic debt service falling to 43 per cent and external debt rising to 57 per cent.
The report draws attention to the risk of refinancing domestic debt, which has been increasing due to the concentration of maturities in the short term.
The average maturity of domestic debt fell from nine to eight years, while debt maturing in one year increased from 15 per cent to 15.9 per cent. In 2025, the high volume of maturing Treasury Bonds could increase the pressure on the public budget.
Even so, the report emphasises that the total public debt ratio, including contingent liabilities, fell from 81.8% of Gross Domestic Product (GDP) in 2022 to 76% in 2023, representing a decrease of 5.8 percentage points, reflecting the improvement in nominal GDP in relation to the total debt stock.
The MEF document also points out that the Bank of Mozambique’s projections for medium-term inflation are favourable, but fiscal aggregates, such as spending on goods and services, and domestic investment remain sensitive to fluctuations in the inflation rate.
An increase of one percentage point in inflation in 2025 could reduce the state’s purchasing power, affecting spending by around 1.2 billion meticals and 820 million meticals respectively.
