Cash-strapped Mozambique is considering approaching China, its largest bilateral creditor, to restructure $1.4 billion in debt, President Daniel Chapo has revealed.
- Mozambique considers seeking assistance from China to restructure $1.4 billion in debt amid fiscal challenges.
- Economic strains result from nationwide unrest and consecutive periods of economic contraction.
- Rising focus on debt sustainability pressures Mozambique to address its external obligations.
Cash-strapped Mozambique is considering approaching China, its largest bilateral creditor, to restructure $1.4 billion in debt, President Daniel Chapo has revealed.
Chapo stated that the government remains under great fiscal strain following back-to-back economic contractions and widespread unrest following the country’s disputed October elections, Bloomberg reported.
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The violence, which caused extensive damage to businesses and infrastructure, has deeply impacted public revenues. With economic recovery still fragile, pressure is mounting on the government to meet its external debt obligations, raising fresh concerns about debt sustainability.
Chapo added that some bilateral lenders have already shown a willingness to support Mozambique, including through potential debt forgiveness.
“Rescheduling or even forgiveness of the debt we have with our largest bilateral creditor is not an outlandish idea,” he said when asked if the nation was considering requesting China to restructure its loans. “Of course, this will always be done within the framework of partnership, within the existing agreement, as we are a serious country that strives to honour its commitments.”
If it moves forward, Mozambique will join a growing list of African nations, including Ghana, Zambia, and Ethiopia, being forced to restructure their debt amid soaring borrowing costs and strained public finances.
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China holds around 14% of Mozambique’s external public debt, but no formal talks have begun, the president said. As of the end of 2024, Mozambique’s total external public debt stood at approximately $9.8 billion.
Speaking on the sidelines of an international development financing event in Seville, Spain, Chapo said the government is seeking to engage with strategic development partners to restructure its debt. “We are always ready to do it because it will ease pressure,” he said.
Mozambique has also approached the International Monetary Fund (IMF) for a new funded program, after walking away from a previous arrangement earlier this year, citing misalignment with the new administration’s policy direction. Chapo indicated that a new deal could be secured within months.
