Mozambique’s external debt fell 7.5% in Q1 after IMF advance repayment

The reduction resulted mainly from the Bank of Mozambique’s advance repayment operation with the IMF, debt service payments and the policy of securing financing on highly concessional terms, according to the Ministry of Finance’s Quarterly Public Debt Bulletin, which Lusa accessed today. At the end of March, the external public debt stock stood at 569,950.5 million meticais (€7.6 billion), compared with 616,091.2 million meticais (€8.2 billion) at the end of December, representing a reduction of 46,140.7 million meticais (€615 million). The bulletin adds that the reduction in the external component resulted from the central bank’s “advance repayment” to the IMF, an operation that “involved the transfer of this obligation from the external component to the domestic component, altering the composition of the public debt portfolio”, but “without an impact” on the overall debt stock.

The Ministry of Finance further explains that the operation involved “the replacement of external liabilities with domestic liabilities”, which is why external debt decreased and domestic debt increased by an equivalent amount, “without this, in itself, representing an increase in the public debt stock”. In the opposite direction, central government domestic debt increased by 12%, rising from 474,508.8 million meticais (€6.3 billion) to 529,837.8 million meticais (€7.1 billion), mainly due to the central bank’s advance repayment to the IMF, amounting to 44,251.8 million meticais (€590 million), and the issuance of new debt to the central bank, amounting to 11,400 million meticais (€152 million). As a result, public and publicly guaranteed debt increased to almost 1.136 trillion meticais (€15.2 billion), equivalent to 75.2% of Gross Domestic Product (GDP), an increase of 8,071.5 million meticais (€108 million) compared with the end of 2025.

The bulletin also highlights a sharp increase in external public debt service during the first quarter, with payments reaching US$776.47 million (€669 million), compared with US$117.36 million (€101 million) in the fourth quarter of 2025, an increase of US$659.11 million (€568 million). According to the Ministry of Finance, this increase was “mainly justified by the extraordinary repayment” to the IMF, which “resulted in the reclassification of this external component as domestic”. Of the total amount paid, US$728.83 million (€628 million) corresponded to capital repayments and US$47.64 million (€41 million) to interest payments.

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During the quarter, the IMF alone accounted for capital repayments of US$704.5 million (€607 million). At the end of March, multilateral creditors continued to represent the largest share of Mozambique’s external debt, accounting for 52% of the total, followed by bilateral creditors with 38%, while the sovereign MOZAM 2032 eurobond represented 10.1% of the external debt portfolio. The Minister of Finance said in May that the full repayment, ahead of schedule, of US$698.6 million (€602 million) in debt to the IMF demonstrated “prudent management capacity” of the State’s commitments, contributing to “restoring confidence” among markets. “By settling this obligation before the deadline, the Mozambican State demonstrates prudent management capacity of its external commitments, reinforcing its reputation as a credible partner in the international financial system,” Carla Louveira said in Parliament.

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