The Bank of Mozambique has issued a stark warning regarding the country’s high volume of outstanding arrears and public debt, cautioning that escalating domestic liabilities are actively disrupting financial market stability and choking commercial banking liquidity. The warning was detailed in an official policy statement released Monday in Maputo following the latest session of the Monetary Policy Committee (CPMO).
According to the central bank, Mozambique’s domestic public debt—excluding specific mutual contracts, leases, and overdue liabilities—surged to 493.1 billion meticais (approximately 6.629 billion euros). This reflects an aggressive increase of 18.5 billion meticais (248.7 million euros) since December 2025 alone, placing immense pressure on available banking capital.
The CPMO highlighted that chronic delays in servicing both internal and external public debts, including obligations owed to domestic financial institutions and multilateral lenders, have damaged investor sentiment.
This fiscal stress has triggered a severe drop in the market’s appetite for government bonds, caused rigidity in interbank money market interest rates, and complicated Mozambique’s broader international risk assessment. Over a broader five-year trajectory, the nation’s total debt stock skyrocketed by 20%, closing out 2025 at an alarming 72.23% of Gross Domestic Product (GDP).
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Data from the state general account recently sent to parliament reveals that total public debt climbed from 909.5 billion meticais in 2021 to 1.090 trillion meticais. Government analysts noted that this rapid expansion was overwhelmingly driven by short-term domestic borrowing, fueled by weak investor demand for longer-term, medium-range financial instruments.
External debt still holds the majority share at 56% of the country’s total liabilities, while internal borrowing compromises the remaining 44%. Short-term Treasury Bills (BT) grew by 21.2% by the end of last December to reach 159.6 billion meticais, while longer-term Treasury Bonds (OT) climbed 6% to 193.2 billion meticais.
This domestic borrowing environment aligns with a February warning from the International Monetary Fund (IMF), which underscored that Maputo faces increasingly restrictive financing constraints that previously caused sharp budget cuts in goods, services, and capital projects.
