By Colleen Goko
JOHANNESBURG, March 24 (Reuters) – The International Monetary Fund will visit Mozambique in the coming months, a Fund spokesperson said, as the Southern African nation seeks help shoring up its increasingly strained finances and grapples with mounting public debt.
Mozambique’s sovereign spread — the premium investors demand to hold its hard-currency debt over U.S. Treasuries — traded at 1,304 basis points on Tuesday, a level typically associated with severe financial distress, data from JPMorgan showed.
Mozambique’s previous IMF programme ended prematurely in April 2025, and the government has been in talks with the lender of last resort for a new one. Discussions are expected during the IMF and World Bank Spring Meetings in Washington in April, the Fund said on Monday in response to questions from Reuters.
“A staff visit to (Mozambique’s capital) Maputo to take stock of recent economic developments and government policies is likely to take place in the coming months,” the spokesperson said.
MOZAMBIQUE INCREASINGLY RELYING ON DOMESTIC MARKET
Mozambique’s debt problems date back to a 2016 hidden-debt scandal, which wrecked investor confidence and curbed access to funding. Delays to major gas projects that had been expected to boost exports, revenues and government finances have made matters worse.
A debt report released last week by the finance ministry pointed to mounting fiscal strain.
Public debt rose 6.8% in 2025 to 474.0 billion meticais ($7.49 billion). Central bank advances in the form of short-term loans to the government to cover budget shortfalls, meanwhile, surged 176.1% over the year to 49.6 billion meticais, equivalent to 10.5% of domestic debt at year-end.
A sharp rise in central bank financing often signals stress in normal funding channels. In Africa, Ghana’s central bank overdrafts eventually contributed to a full debt restructuring, while Nigeria converted a large volume of central bank lending into long-term bonds.
The IMF, in its latest annual review of Mozambique, noted that domestic banks — the primary buyers of government debt — have reached their appetite limits, while net external financing has turned negative, indicating that outflows now exceed new inflows.
($1 = 63.2500 meticais)
(Reporting by Colleen Goko; Editing by Joe Bavier)
Comments