Interest costs on Mozambique’s debt grew by 12% in 2024, compared to the previous year, to 57,608 million meticais (€857.4 million), according to official figures that Lusa had access to yesterday.
According to the same figures, this amount compares with the 49,929 million meticais (€743 million) that the state spent on the so-called debt burden in 2023.
The interest payment component of the domestic debt alone grew by 13% in 2024, to more than 45,691 million meticais (€680 million), while the state spent almost 11,395 million meticais (€177.6 million) on interest on the external debt, an increase of 9.5% in the space of a year.
Lusa reported this week that Mozambique’s public debt stock exceeded one trillion meticais (€15.8 billion) in 2024, an increase of 9% in one year.
According to information on budget execution, the Mozambican state’s debt grew from January to December to almost 1.069 trillion meticais.
On 31 December, the domestic debt stock reached more than 407,085 million meticais (€6.14 billion), while the external debt exceeded 636,548 million meticais (€9.6 billion).
According to the document, external debt increased by 1.4% in 2024, “mainly due to the adjustment of data associated with the migration to the new debt management system, MERIDIAN.
“On the other hand, domestic debt increased by 21.8%, mainly due to the issue of short-term debt through Treasury Bills, totalling 46,162.9 million meticais (€696.2 million), and under the Credit Facility with the central bank, totalling 28,100 million meticais (423.8 million),” the document said.
The 2023 public debt report by the Mozambican Ministry of Economy and Finance warned in April last year of the pace of growth of domestic debt, which, if it continues, threatens the process of reversing its unsustainability.
“If domestic debt continues to grow at the current rate over the next five years, the breakdown of the “stock” could balance out at 50% domestic/50% external by 2029, with a portfolio dominated by purely commercial instruments, a scenario that would jeopardise the chances of reversing the unsustainability of the debt in this generation,” the document said.
As interest rates on Treasury Bills (BT, short maturities) and Treasury Operations (OT, longer maturities) “have risen, the cost of domestic financing has driven a continuous upward adjustment of the weighted average interest rate on the government’s loan portfolio”.
The rate went from “5% in 2021 to 5.8% in 2022 and now 6.5% in 2023, making a cumulative increase of 150 basis points in two years,” says the report, which also warns that the “refinancing risk, reflected in the growing concentration of maturities” of public debt “in the short-term horizon, represents the greatest vulnerability.”
Source: Lusa
