World Bank looks at ‘all options’ to help debt-burdened Mozambique

The World Bank is working with Mozambique to tackle the country’s mounting debt challenges, ​a senior bank official said, as its borrowing costs surge, highlighting pressure on its finances against ‌a backdrop of heightened geopolitical risk. The country is struggling to stabilise its economy, burdened by debt, weak growth and the impact of climate shocks. Hopes of a recovery hinge partly on the restart of major liquefied natural gas projects.

Fily Sissoko, World Bank regional director for Mozambique, said a ​Debt Sustainability Analysis, drafted with the International Monetary Fund and published in February, showed debt was not sustainable. “The ​government is very well aware of this and working very closely to see how we ⁠can help them address some of these imbalances, looking at all options,” he told Reuters. The bank is already preparing $6 billion ​in mostly concessional financing over five years, Sissoko said.

Another $4 billion in private sector investment could be brought in with ​the help of World Bank private sector arm, the International Finance Corporation, and loan and investment guarantee platform, the Multilateral Investment Guarantee Agency. Mozambique’s sovereign spread – the premium investors demand to hold its hard-currency debt over U.S. Treasuries – rose above a 1,000 basis-point threshold this week to hit ​a ten-month high, data from JPMorgan showed.

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The surge also reflects a broader retreat from emerging market debt, spurred in part ​by the Middle East conflict. This chart shows the sovereign spread of Mozambique rising above the 1,000 level, a threshold that indicates distress Mozambique’s sole international $900 million bond is in the spotlight since President Daniel Chapo said ‌in January ⁠some debt restructuring might be necessary, without giving more details. Chapo emphasised a focus on renegotiating terms with international creditors following an anticipated deal with the IMF.

Mozambique’s previous IMF programme ended prematurely in April 2025. Sissoko said Mozambique could address some long-standing structural issues, such as high fiscal deficits, with improved revenue collection, enhancing fiscal efficiency, and advancing fiscal consolidation.

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