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Mozambique’s slow-burning economic crisis has intensified in recent weeks, with lenders and ratings firms warning that the country may need to restructure its only international bond. The pressure reflects years of fiscal strain, delayed gas developments and political instability after the 2024 election unrest.
The International Monetary Fund reclassified Mozambique’s debt as unsustainable in February, reversing its 2024 view. It said tough financing conditions in 2025 left debt-service arrears estimated at 1.3% of GDP by year-end.
Those arrears include money owed to development financiers such as the European Investment Bank and to domestic creditors holding short-term government securities. The government’s finances have also been weakened by an Islamist insurgency in the north, which has slowed major gas projects backed by firms such as TotalEnergies and ExxonMobil.
Market signals have deteriorated sharply. Mozambique’s sovereign bond spread over U.S. Treasuries has widened to 1,185 basis points, while the metical has weakened 0.8% against the dollar this year and the economy is estimated to have contracted by 0.5% last year.
The strain is now focused on Mozambique’s sole $900 million international bond due in 2031, with an interest payment due in September. Fitch downgraded the country to CC last month, while Citi said Mozambique and Malawi could be among the next African sovereigns to default.
