Mozambique faces rising public debt and economic growth revisions

Mozambique is facing complex economic shifts. Public and guaranteed debt rose to approximately €15.2 billion in Q2, reaching 75.9% of GDP, driven largely by an increase in domestic debt and financing from the Bank of Mozambique. Conversely, external debt service fell by 82.1% following an early repayment of $698.6 million to the IMF in the first quarter.

In the state enterprise sector, total debt fell by 4.35% in Q2, led by reductions from the national airline, LAM. To support LAM’s restructuring, shareholders HCB, CFM, and EMOSE created Fly Moz Investimentos, a special purpose vehicle registered on the Mozambique Stock Exchange. This company will acquire aircraft to be leased to LAM under dry lease agreements.

Economic outlooks remain cautious. S&P has lowered Mozambique’s 2026 real GDP growth forecast to 0.7%, citing dollar shortages, restrictive financing, and climate-related agricultural disruptions. Meanwhile, the Mozambique Sovereign Wealth Fund reached a market value of $144.4 million by late September, though its portfolio experienced recent minor losses.