Mozambique’s domestic debt has tripled since 2020

The stock of Mozambique’s domestically issued public debt has tripled since 2020, reaching 487.266 billion meticais (€6.627 billion), now accounting for nearly 30% of Gross Domestic Product (GDP), according to warnings from the central bank. “The level of domestic public debt continues to deteriorate, negatively affecting the functioning of the financial market,” the Bank of Mozambique notes in its Economic Outlook and Inflation Prospects report released today. The report, seen by Lusa, states that the total stock of domestically issued public debt, including Treasury Bills (BT), Treasury Bonds (OT), and advances to the State from the central bank, stood at 155.973 billion meticais (€2.121 billion) in December 2020, equivalent to 14.7% of GDP at the time.

Since then, the Bank of Mozambique data shows, domestic public debt has steadily risen both in absolute terms and as a share of GDP, reaching 29.4% today. The report also warns that “delays in meeting obligations associated with domestic public debt instruments by the State, particularly Treasury Bonds, have contributed to reduced appetite for new investment in public securities, as well as maintaining rigidity in interbank money market interest rates.” On Treasury Bill issuances, the State paid interest rates of 12.07%, 12.16%, and 12.25% for maturities of 91, 182, and 364 days, respectively, remaining virtually unchanged in the first quarter. “This rigidity in rates fundamentally reflects the perception of high fiscal risk by commercial banks,” the document reads.

The central bank also notes that between January and March 2026, the State conducted OT exchange auctions with three-year maturities, where the weighted average interest rate was set at 13.50%, the same as previously. Mozambique has undertaken successive debt swap operations in Treasury Bonds, which Standard & Poor’s (S&P) has classified as a selective default in its latest rating review of Mozambique, released on 27 March. As a result, the domestic issuance rating remains at ‘SD’ (selective default) due to arrears and internal debt swaps considered default operations by the agency.

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At the end of 2025, Mozambique had accumulated arrears on domestic public debt servicing of nearly 4.66 billion meticais (€63.2 million) due to treasury constraints, Lusa previously reported. “The accumulation of these arrears resulted mainly from revenue mobilisation constraints, in a context of economic slowdown and pressure on Treasury liquidity,” notes a Ministry of Finance report on Mozambique’s public debt developments in 2025.

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