The cost of servicing Mozambique’s debt will grow by 18% in 2024, to more than 116.6 billion meticais, according to figures from the Mozambican government.
According to the documents supporting the proposal for the Economic and Social Plan and State Budget (PESOE) for 2024, under discussion in Parliament, it is estimated that the cost of servicing Mozambique’s debt – interest payments and repayment of capital – will be equivalent next year to 7.6% of the estimated Gross Domestic Product (GDP).
For this year, the government’s forecast for the cost of servicing the debt is 98.8 billion meticais, equivalent to 7.5% of the GDP expected for 2023. The previous year, it was 72.3 billion meticais, with a weight of 6.1% of GDP.
“The acceleration in capital repayment is related to the framework of the external debt Restructuring Agreement, with maturities to be verified in 2024. In addition, a change in the external debt interest rate is expected for securities maturing in 2024,” the document reads.
Half the public debt will be amortized in 2024
As a result, more than half of the cost of servicing Mozambique’s public debt next year will be capital repayments, amounting to 60.9 billion meticais, and 55.7 billion meticais in interest payments, of which 41.4 billion meticais relates to debt issued domestically, through Treasury bonds and bills.
Meanwhile, this month, the governor of the Bank of Mozambique acknowledged “the strong pressure on public spending” in the country, “in a context of weak revenue collection and limited sources of external financing”, which “is contributing to an increase in fiscal risk and domestic indebtedness”.
“The increase in spending is mainly due to the implementation of the salary reform and spending related to the electoral cycle,” warned Rogério Zandamela on November 1.
