Mozambique’s financial crisis is escalating as the country’s debt restructuring looms, raising concerns for its 35 million citizens. The government’s struggle to stabilize its economy is compounded by political unrest and delayed gas projects.
Mozambique’s public debt fell slightly to 93.7% of GDP in 2023, down from 100.3% the year before. However, the International Monetary Fund (IMF) still classifies the nation as being at high risk of debt distress. External debt-to-GDP improved marginally to 66.2%, but delays in liquefied natural gas (LNG) development have hampered efforts to reduce external debt servicing costs.
New Finance Minister Carla Louveira disclosed that the government lost 42 billion metical ($664 million) in revenue during October’s violent protests over disputed presidential election results. “The government has no choice but to restructure domestic and foreign debts to stabilize finances,” Louveira told Bloomberg.
Political Turmoil Hits State Revenues
October’s protests, which left over 300 people dead, erupted after opposition leader Venancio Mondlane accused the ruling Frelimo party of electoral fraud. Despite President Daniel Chapo’s recent inauguration and his pledge to restore stability, Mondlane has urged supporters to continue demonstrations.
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The unrest has not only disrupted Mozambique’s economy but also delayed critical infrastructure projects. The government faces mounting pressure to clear external debt arrears, which totaled $1.2 billion by the end of 2023, according to IMF data.
Chapo’s administration must balance fiscal discipline with improving welfare and ensuring political stability.
Gas Projects Delayed, Hope Deferred
Mozambique’s vast gas fields, potentially worth billions in export revenue, remain underdeveloped due to an ongoing Islamist insurgency in the north. The delays mean the government must wait longer to benefit from LNG exports that could alleviate debt servicing pressures.
