Mozambique’s public debt has surged to 78.9 percent of gross domestic product, with rising domestic borrowing sparking concerns over long-term fiscal sustainability.
According to the latest Quarterly Bulletin on Public Debt released by the Ministry of Finance late Tuesday, Mozambique’s total public debt reached 1,100 billion meticais (about US$16.7 billion) in the last quarter of 2025, reflecting a 2.7 percent increase from the previous quarter.
“The increase was mainly driven by the domestic debt, which climbed by 8.9 percent, reflecting a growing dependence on short-term financing mechanisms such as advances from the central bank and Treasury Bills,” the bulletin said.
While Mozambique managed to slightly reduce foreign debt by 1.2 percent, domestic borrowing now accounts for 41 percent of the total debt stock, often under costly conditions that trap the government in a cycle of refinancing at higher rates.
The bulletin warned that half of this domestic debt is concentrated in short-term securities, increasing the risk of refinancing shocks in the face of economic instability.
Meanwhile, foreign debt servicing jumped by 78.7 percent in a single quarter, reaching US$210.3 million due to the settlement of arrears and exposure to exchange rate fluctuations and external financial pressures.
The finance ministry cautioned that Mozambique’s growing dependence on expensive short-term debt is unsustainable, especially amid weak domestic revenue, post-election instability and inflationary pressures.
“With the budget deficit being covered mainly by expensive, short-term domestic debt, Mozambique is heading down an unsustainable fiscal path unless structural reforms – such as broadening the tax base and greater discipline in public spending – are implemented as a matter of urgency,” the report said.
It further warns that macroeconomic risks remain high and without a prudent borrowing strategy and stronger financial management, the country may struggle to maintain solvency and finance its development agenda.
Economists and policymakers are now pushing for urgent fiscal reforms to stabilise public finances and reduce reliance on costly domestic borrowing.
Analysts emphasise the need for more diversified revenue streams and long-term debt restructuring to avoid a looming financial crisis.
The finance ministry has yet to announce specific measures to address the growing debt burden.
JN/APA