Mozambique is currently facing a severe debt crisis that is threatening the country’s economic stability and development prospects. Recent reports show that both internal and external debts have reached alarming levels, with the country having to pay over one billion euros in internal debt alone by 2026.
This surge in internal public debt is part of a wider issue, with total debt service payments hitting a record high in 2023. The country’s total public debt has grown significantly, reaching $15.8 billion in 2023. The debt crisis can be traced back to a hidden debt scandal in 2016, which led to Mozambique’s withdrawal from international financial markets.
As a result, the government resorted to domestic borrowing to fund public expenditures. The situation has been further exacerbated by a government program aimed at simplifying public sector spending, which backfired and increased expenses.
Mozambique’s Financial Challenges
Furthermore, external debt is also posing significant challenges, with Eurobond interest rates almost doubling. The IMF projects the country’s economy to grow by 5% this year, but public debt is expected to soar to 97.5% of GDP, one of the highest in Africa.
The government’s ability to manage debt while promoting sustainable economic growth will be crucial in the years to come, as Mozambique works towards overcoming these financial hurdles and attracting international investors.