Mozambique is weighing the possibility of approaching China—its largest bilateral lender—for the restructuring of $1.4 billion in external debt, as the country grapples with fiscal strain and mounting economic challenges.
President Daniel Chapo, according to Bloomerg’s report, disclosed the potential move while speaking at an international development finance forum in Seville, Spain.
He emphasized that the government remains committed to honoring its obligations but acknowledged that debt rescheduling—or even partial forgiveness—could become necessary within the framework of international cooperation.
The president’s remarks follow months of economic contraction and widespread unrest linked to the contested October 2024 elections, which have disrupted revenue generation and damaged infrastructure. These challenges have intensified concerns over Mozambique’s debt sustainability, with public finances under increasing pressure.
“Rescheduling or even forgiveness of the debt we have with our largest bilateral creditor is not an outlandish idea,” Chapo said, referring to China, which holds about 14% of Mozambique’s external public debt, valued at approximately $9.8 billion by the end of 2024.
Although no formal negotiations have started with Beijing, Mozambique joins a growing list of African nations—including Ghana, Zambia, and Ethiopia—exploring debt restructuring options in the face of rising borrowing costs and fiscal instability.
President Chapo also confirmed that Mozambique has re-engaged the International Monetary Fund (IMF) to negotiate a new funding program after withdrawing from an earlier agreement.
A revised deal aligned with the new administration’s policy agenda is expected to be finalised within months.
This potential debt relief move reflects the broader shift among African countries seeking to restore macroeconomic stability amid evolving global financial conditions.
Image Credit: Coinfomania
