As Mozambique faces an unprecedented economic and political crisis, financial indicators, government reforms and the impacts of international dynamics outline a week of challenges and opportunities. The increase in public debt, the introduction of new fiscal and monetary policies and analyses of the implications of global decisions, such as Donald Trump’s protectionist policies, reinforce the need for a delicate balance between austerity and sustainable growth.
Mozambique’s external debt service registered a significant increase of 13% in the third quarter of 2024, totalling 280 million dollars (19.3 billion meticals). This increase was driven by amortisation and interest payments, with 14.5 billion meticals going towards amortisation and 4.8 billion towards interest.
Domestic public debt also grew, totalling 396 million meticals, with the issue of Treasury Bills standing out as one of the main sources of funding. On the other hand, external debt increased by 3.4 per cent to 673.1 million meticals, attributed to the adjustment of data during the migration to a new debt management system.
Political instability in the country worsened the fiscal scenario. Post-election protests led by the opposition Venâncio Mondlane, who is contesting the results of the 9 October general elections, resulted in more than 300 deaths and 600 injuries, as well as tax losses estimated at 42 billion meticals.
Finance Minister Carla Louveira admitted the need to restructure public debt, stressing that the government is committed to honouring its obligations and implementing reforms to improve fiscal management.
BoM Introduces New Series of Notes and Records Monetary Growth
The Bank of Mozambique (BoM) revealed that the volume of physical money in circulation rose to 69.3 billion meticals (one billion dollars) in November 2024, up 3% on October. This is the seventh consecutive month of monetary growth, consolidating an accumulated rise of 6.6 per cent since May.
At the same time, the BoM introduced a new series of notes and coins, which began circulating in June 2024. The new denominations adhere to modern security and design standards, while honouring Mozambique’s cultural and historical values. The higher denomination notes remain in paper, while the lower denomination notes have been adapted to polymer, offering greater durability.
Government Reforms Aim to Rebalance Debt Management
The inauguration of the new government brought the promise of structural reforms. Carla Louveira, the new minister, announced measures that include debt exchange auctions and the dynamisation of the secondary market, with the aim of reducing financing costs and increasing the efficiency of the public securities market.
These reforms are seen as responses to the challenges posed by the fiscal and political crisis resulting from the violent protests, which have jeopardised public revenue and economic stability.
Impacts of Donald Trump’s Policies on the Mozambican Context
The re-election of Donald Trump and his protectionist policies have generated analyses by economists on possible impacts for Mozambique. Experts argue that direct trade with the US is relatively small, representing only 1% to 2% of the country’s total exports and imports, which reduces the direct impact of US measures.
However, they highlighted possible indirect benefits, such as the valorisation of fossil fuels due to the US delay in adhering to international environmental policies. Mozambique, with vast gas reserves in Cabo Delgado and investments from ExxonMobil, could benefit from a prolonged valorisation of these resources.
Analysts also believe that the Trump administration’s counter-terrorism policy could continue to benefit Mozambique through military co-operation and investments in the security sector, especially in Cabo Delgado.
Text: Felisberto Ruco
