Mozambique’s public debt stands at around US$14.4 billion

MAPUTO, Mozambique

Mozambique’s public debt currently stands at around US$14.4 billion, of which 30% is domestic debt, contracted within the country, and 70% external debt.

The information was shared in parliament on Wednesday (10 May) by Minister of Economy and Finance Ernesto Max Elias Tonela, who added that, historically, Mozambican state budgets have been in deficit, a press release from the Mozambican parliament reports.

The minister was speaking at a parliamentary session dedicated to questions to the government.

Still addressing the issue of public debt, Tonela said that the government, as is the practice in public finance management, resorts to internal debt and to external credit, in addition to other financial resources mobilised under non-repayable loans, to promote socio-economic development in the country.

"Internally, the state issues treasury bonds, which are long-term instruments, and treasury bills, to meet short-term financing needs,” the minister explained.

Tonela stressed that the state’s annual budgets always include resources allocated to pay interest and meet any other such obligations. “This year, the state will pay US$1,571 million. This is a priority that the government will comply with,” he said.

The government has a public debt management strategy, Tonela told parliament, which sets indebtedness parameters, ensuring that public borrowing needs are met at the minimum cost and at a prudentially reasonable level of risk, thus ensuring that the pursuit of national development aspirations is consistent with maintaining long-term fiscal and macroeconomic stability.

Regarding Value Added Tax (VAT) refunds, Tonela clarified that challenges persist with the amount accumulated, but the government had been working on reviewing the regulatory framework to improve the VAT refund mechanism.

"In recent years, 10,528 requests have been processed, corresponding to 164.8 billion meticais. Of these 8,120 have actually been paid, corresponding to 96.9 billion meticais, about 60% [of the accumulated total],” the minister explained. “There remains a potential debt of 39 billion meticais, around 40%, [to be paid in VAT refunds] for small and medium enterprises.”

The Minister of Economy and Finance told MPs that, as part of the revision of the Value Added Tax code (VAT) approved by parliament in December, 2022, “the executive introduced a deadline of 12 months for filing [VAT] reimbursement requests, which will allow the government to better schedule the payment of refunds”.

"Rules stipulated in the new VAT Code will allow the state to better organise itself, in financial terms, to meet reimbursement commitments without unbalancing the approved budget expenditure for the fiscal year,” the minister said.