Mozambique on Monday signed a debt repayment rescheduling agreement with China aimed at easing pressure on the state budget and creating greater fiscal space for infrastructure, public services and other development priorities.
The supplementary framework agreement was signed in Maputo by Finance Minister Carla Loveira and Chinese Ambassador Zheng Xuan following meetings between Mozambican President Daniel Chapo and Chinese President Xi Jinping during Chapo’s state visit to China in April.
Mozambique’s Ministry of Finance said the agreement forms part of the country’s Medium-Term Public Debt Management Strategy for 2025-2029 and is intended to better align debt servicing obligations with the government’s financial capacity.
Loveira said the rescheduling would improve the predictability of public finances and help the government balance its debt commitments with development needs.
The agreement will now be followed by the formalisation of the necessary financing instruments with the Export-Import Bank of China (Exim Bank), one of Mozambique’s largest bilateral lenders.
China is Mozambique’s biggest bilateral creditor, having financed major infrastructure projects over the past two decades, including roads, bridges, public buildings, airports and energy infrastructure.
According to World Bank and debt-monitoring data, Chinese loans account for a significant share of Mozambique’s external bilateral debt portfolio.
Mozambique has been seeking to improve debt sustainability after years of fiscal strain exacerbated by the country’s debt crisis, which followed the disclosure in 2016 of more than US$2 billion in previously undisclosed state-guaranteed loans.
The scandal triggered a sovereign debt default, cut off external budget support and weakened investor confidence.
In recent years, the government has pursued debt restructuring and fiscal consolidation measures while seeking to maintain spending on economic recovery and social development programmes.
JN/APA