MAPUTO, Mar 19 – Mozambique is facing mounting debt pressure, with public debt rising to about 91% of GDP, prompting the World Bank to step up support as borrowing costs climb.
A recent Debt Sustainability Analysis by the World Bank and the International Monetary Fund found the country’s debt is not sustainable, highlighting growing fiscal strain as the government grapples with weak growth, climate shocks and limited revenue.
World Bank regional director for Mozambique, Fily Sissoko, said the institution is working closely with authorities to address the imbalance, with a focus on stabilising public finances over the medium term.
As part of this effort, the bank is preparing a $6 billion financing package over five years, largely on concessional terms. In addition, up to $4 billion in private investment could be mobilised through the International Finance Corporation and the Multilateral Investment Guarantee Agency.
Mozambique’s rising risk profile is already reflected in markets. Its sovereign spread crossed 1,000 basis points this week, reaching a ten-month high, as investors demand higher returns to hold its debt amid a broader pullback from emerging markets.
The country’s $900 million Eurobond has also come under scrutiny after President Daniel Chapo indicated that some form of debt restructuring may be needed. The government is expected to prioritise renegotiations with international creditors following a new agreement with the IMF, after its previous programme ended in April 2025.
Data from the debt analysis shows that Mozambique had arrears equivalent to 1.3% of GDP by the end of 2025, with missed payments to creditors including China, India and Saudi Arabia.
Officials say reforms will focus on improving revenue collection, reducing fiscal deficits and strengthening spending efficiency. At the same time, authorities are looking to future growth drivers, particularly liquefied natural gas projects, which could significantly boost revenues if fully developed.
