The Mozambican government has expressed its willingness to study the possibility of converting its debt with Portugal into a financing mechanism to boost the “climate transition”. A source from the Ministry of Economy and Finance (MEF) revealed to Lusa that, given Mozambique’s growing exposure and vulnerability to the impacts of climate change, the country is open to discussing this innovative approach with its cooperation partners.
Mozambique’s debt to Portugal currently stands at 675 million euros (46.3 billion meticais), a considerable figure that puts debt management at the center of the government’s concerns. Closing the third quarter with a public debt stock of 971.7 billion meticais, the Ministry of Economy and Finance noted an increase of 5.1% compared to the end of 2022, as highlighted in the recent economic and social balance report.
The increase in debt, as emphasized in the report, was largely influenced by the evolution of domestic debt, even amid a relative stabilization of external debt. This scenario raises concerns about financial sustainability and highlights the importance of exploring innovative strategies to ease the debt burden.
The MEF source stressed the Mozambican government’s openness to assessing the feasibility of converting the debt into a financing mechanism dedicated to the climate transition. This approach, which has been studied with other creditors, reflects the recognition of the urgent need to tackle environmental challenges and Mozambique’s willingness to collaborate with its partners, including Portugal, in this effort.
The proposed dialogue not only highlights the search for innovative solutions, but also underlines Mozambique’s commitment to environmental issues. Converting debt into climate investment could represent a unique opportunity to address not only immediate financial concerns, but also promote environmental sustainability, aligning with global climate change mitigation goals.
Despite the financial challenges highlighted by rising debt, Mozambique is demonstrating resilience by seeking innovative and collaborative approaches. The possibility of converting debt into climate investment not only opens up new horizons for cooperation between Mozambique and Portugal, but also highlights the importance of addressing financial issues in a broader context of global sustainability.
