Mozambique's total public debt reached 74.7% of gross domestic product in 2025, against a backdrop of economic contraction, reduced external disbursements, and increased reliance on domestic financial markets. In nominal terms, the consolidated debt stock stood at 1.12 trillion meticais, equivalent to $17.5 billion.
According to the 2025 Annual Public Debt Report, reviewed by Diário Económico, the Mozambican economy contracted by 0.2% in 2025, following growth of 2.15% the previous year. The report attributes this deterioration to post-electoral shocks in 2024 and extreme weather events recorded in the first quarter, which prompted the government to revise its budget targets and financing strategy.
To address the fiscal deficit and fund current expenditure, the central government's direct debt rose 4.5%, climbing from 1.04 trillion meticais ($16.2 billion) to more than 1.09 trillion meticais ($17 billion). At the same time, the debt profile shifted: external debt fell 3.2% while domestic debt expanded 16.6%.
The decline in external debt coincided with a 58% drop in disbursements from international partners. In response, greater recourse to domestic financial markets pushed the internal debt stock to 474.5 billion meticais ($7.4 billion).
Domestic financing was secured primarily through the issuance of Treasury Bills, the refinancing of Treasury Bonds, and drawdowns on the credit facility with the Bank of Mozambique (BdM). While this approach reduced exposure to exchange rate risk, it heightened refinancing risks due to the high concentration of Treasury Bill maturities.
Despite tighter external financing conditions, average inflation slowed to 4.37%, allowing the Bank of Mozambique to ease monetary policy. The MIMO rate fell from 12.7% to 9.50%, the Prime Rate dropped to 15.80%, and the metical remained broadly stable against the US dollar, though it registered a modest depreciation against the euro.
In the State-Owned Enterprises (SEE) sector, direct debt held by public companies declined 2.8% in nominal terms to 37.28 billion meticais ($583.3 million). The report highlights the redemption of domestic bonds by Caminhos-de-Ferro de Moçambique (CFM), Linhas Aéreas de Moçambique (LAM), and Aeroportos de Moçambique (ADM). However, the sector's external debt edged higher due to new investment in railway infrastructure.
Contingent liabilities continue to pose a risk to public finances. The stock of sovereign guarantees issued by the state increased to 52.2 billion meticais ($816.8 million), equivalent to 3.5% of GDP, while payment arrears totalled more than 14.7 billion meticais ($230 million) on external debt and 5.4 billion meticais ($84.5 million) on domestic obligations.
In response to these pressures, the Ministry of Finance approved the Medium-Term Public Debt Management Strategy 2025–29 and revised the regulatory framework governing Treasury Bonds. With Mozambique's removal from the FATF Grey List and the present value of external debt fixed at 29.6% of GDP — at the boundary of sustainability — the government aims to restore fiscal balance and rebuild confidence among domestic and international investors.
Source: Diário Económico
Original article: https://www.diarioeconomico.co.mz/2026/08/05/economia/divida-publica-atingiu-747-do-pib-em-2025/
