Friday, July 19, 2024

Mozambique will be the third African country with the highest public debt in 2024, reveals IMF

According to projections by the International Monetary Fund (IMF), Mozambique will be the third African country with the highest public debt in relation to Gross Domestic Product (GDP) in 2024. The country, already facing significant indebtedness, will see its debt rise to 92.4 per cent of GDP next year, compared to the 89.7 per cent estimated for the current year.
Continentally, only Sudan, with an impressive 238.8 per cent debt to GDP, and Cape Verde, with 109.7 per cent, exceed the forecast for Mozambique. The latter will stand out as one of the few nations to witness a substantial increase in its indebtedness, standing clearly above the African average of 59.7 per cent, while many other countries in the region are predicted to experience reductions or stability in their debts.
The IMF’s “Africa Special Issue” report highlights that among the 50 African countries analysed, only 12 are expected to witness an increase in their public debt in 2024. Mozambique, with an increase of 2.7 percentage points, ranks third on this list, preceded by Rwanda and the Comoros Islands.

As for the ranking of African countries with the highest levels of public debt in 2024, Mozambique ranks third, behind Sudan and Cape Verde. This puts the country above the African average of 62.7 per cent and the Sub-Saharan African average of 55.8 per cent, although it remains below the 94.3 per cent recorded in 2022.
In terms of the major African economies, Angola projects a public debt of 77.1 per cent of GDP in 2024, ranking as the 11th highest percentage on the continent. South Africa follows with 75.8 per cent, while Nigeria maintains one of the lowest rates, with just 41.3 per cent.
The five African countries with the highest public debts in relation to GDP in 2024 are:

  1. Sudan – 238.8 per cent (256 per cent in 2023);
  2. Cape Verde – 109.7 per cent (113.1 per cent in 2023);
  3. Mozambique – 92.4 per cent (89.7 per cent in 2023);
  4. Congo – 91% (97.8% in 2023);
  5. Egypt – 88.1 per cent (92.7 per cent in 2023).
    These conclusions were presented in the International Monetary Fund’s “Africa Special Issue” report.
    It is important to note that, according to the latest quarterly bulletin on public debt from the Ministry of Economy and Finance, the Mozambican state ended the third quarter of 2023 with a public debt stock of 972 billion meticais, indicating an increase of 5.1 per cent compared to the end of 2022.

External debt, which accounts for 66 per cent of the total, is estimated at 643 billion meticais, with emphasis on multilateral and bilateral creditors (with China in particular) and Eurobonds (Mozam 2032). Domestic debt, which makes up 44 per cent of the total, has grown by 16 per cent since December 2022, reaching 328 billion meticais at the end of the third quarter of 2023.
With regard to debt servicing costs, the Economic and Social Plan and State Budget (PESOE) for 2024 estimates that interest payments and principal repayments will represent 7.6 per cent of the GDP projected for next year. This implies an increase of 18% compared to 2023, totalling approximately 116.6 billion meticais. For this year, the government forecasts costs of around 98.8 billion meticais, corresponding to 7.5 per cent of GDP, while in 2022 it was 72.3 billion meticais, representing 6.1 per cent of GDP.

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