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Mozambique to Be Africa’s Third Largest Debt/GDP Ratio By 2024

Mozambique to Be Africa’s Third Largest Debt/GDP Ratio By 2024

According to IMF estimates, Mozambique will increase its public debt next year to 92.4 per cent of Gross Domestic Product (up from 89.7 per cent this year). At the African level, only Sudan (with 238.8 per cent) and Cape Verde (109.7 per cent) will have higher debt. If these estimates are confirmed, Mozambique’s public debt as a percentage of GDP will be clearly above the continent’s average (59.7 per cent), and will be one of the few to worsen in 2024.

In its Africa Special Issue report, the International Monetary Fund (IMF) predicts that there will only be 12 African countries (out of the 50 with data available for analysis) whose public debt as a percentage of GDP will increase in 2024. The biggest increases will be in Rwanda (+8.8 percentage points), the Comoros Islands (+3.6) and, in third place, Mozambique, which will rise from the 89.7 per cent forecast in 2023 (the sixth highest percentage on the continent) to 92.4 per cent in 2024, i.e. an increase of 2.7 percentage points.

In terms of the ranking of African countries with the highest levels of public debt next year, Mozambique also ranks third in this criterion. Sudan has the highest percentage of public debt as a percentage of GDP (238.8 per cent), followed by Cape Verde (109.7 per cent) and finally Mozambique, with 92.4 per cent, clearly above the African average of 62.7 per cent, or the Sub-Saharan African average of 55.8 per cent, although below the 94.3 per cent recorded in 2022.

Among the region’s major economies, Angola will have an estimated public debt of 77.1 per cent of GDP in 2024 (the 11th highest percentage on the continent), followed by South Africa (75.8 per cent), with Nigeria having one of the lowest at just 41.3 per cent.

The five African countries with the highest public debts as a percentage of GDP are:

Sudan – 238.8 per cent (256 per cent in 2023);
Cape Verde – 109.7% (113.1% in 2023);
Mozambique – 92.4% (89.7% in 2023);
Congo – 91% (97.8% in 2023);
Egypt – 88.1% (92.7% in 2023).
Source: Africa Special Issue, International Monetary Fund

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It should be noted that according to the latest quarterly bulletin on public debt from the Ministry of Economy and Finance, published at the end of November, the Mozambican state closed the third quarter of this year with a public debt stock of 972 billion meticais, which means an increase of 5.1% compared to the end of 2022. The external debt component, valued at 643 billion meticais, is the most important (it accounts for 66% of the total) and includes the portions relating to multilateral creditors (such as the World Bank, IMF and ADF), bilateral creditors (with China standing out) and Eurobonds (Mozam 2032). The domestic debt component (44% of the total) is the one that has grown the most (16% compared to December 2022), and was valued at 328 billion meticais at the end of the third quarter of this year.

With regard to debt servicing costs, according to the proposal for the Economic and Social Plan and State Budget (PESOE) for 2024, it is estimated that the sum of interest payments and capital repayments will be equivalent to 7.6% of the estimated GDP for next year, which means that the cost of servicing Mozambique’s debt will rise by 18% in 2024 to approximately 116.6 billion meticais.

For this year, the government’s forecast for the cost of servicing the debt is 98.8 billion meticais, equivalent to 7.5% of GDP%. The previous year it was 72.3 billion meticais (6.1% of GDP).

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