Mozambique’s public debt ballooned by 26.2% over five years, reaching a record US$16.2 billion at the close of 2024, according to a newly released report on May 12 by the Ministry of Finance. The rise is primarily attributed to a sharp surge in domestic borrowing to plug Treasury shortfalls following the withdrawal of budget support by international partners.
Although external debt still forms the bulk—accounting for 61%—domestic debt now represents a growing 39% share, underlining the country’s increasing reliance on internal financial instruments such as Treasury Bills and central bank financing.
The Ministry’s report points to positive strides in fiscal adjustments and improvements in debt management, yet it underscores intensifying vulnerabilities. In 2024 alone, domestic debt grew by nearly 30%, placing significant pressure on state coffers. The growing concentration of short-term domestic instruments has heightened refinancing risks, with almost half of local debt requiring roll-over within a single year.
By contrast, external debt decreased by 2.6%, partly due to debt relief from Iraq and the adoption of a new debt management system, MERIDIAN, which brought data accuracy improvements.
Compounding the concerns, the report highlights that Mozambique’s debt portfolio remains heavily exposed to exchange rate fluctuations, given that over 60% of liabilities are tied to foreign currency. Interest rate volatility also looms large, with more than 60% of domestic debt maturing within a year.
However, a silver lining appeared in the form of an out-of-court settlement with Credit Suisse and Privinvest, which saw the country’s liabilities from the infamous undisclosed debts scandal slashed from US$1.4 billion to US$220 million. The deal also secured over US$825 million in compensation for Mozambique—an outcome that could ease some fiscal strain while the broader challenge of debt sustainability remains unresolved.