Mozambique has obtained US$256 million in debt forgiveness from Iraq, addressing about 80% of its loans from over forty years ago. The remaining debt will be restructured for 15 years with a grace period. Current external debt totals US$10.5 billion, with significant increases in domestic debt reported for 2024.
Mozambique has significantly benefited from debt forgiveness, receiving US$256 million from Iraq, which represents approximately 80% of its total indebtedness to the nation stemming from loans taken over forty years ago. This reduction in debt will facilitate economic recovery, allowing Mozambique to allocate resources more effectively. The remaining 20% of the debt will be rescheduled over a 15-year period, commencing in 2029, with an initial grace period of four years as per the Ministry of Finance’s announcement.
Details indicate that US$60.2 million of the forgiven debt was incurred between 1979 and 1980 for oil purchases. However, challenges and adverse economic conditions have escalated the debt amount to about US$320.1 million, complicating repayment efforts. The Ministry underscored the ongoing economic difficulties impacting the nation’s compliance with its financial obligations.
Negotiations leading to the debt concession were held in Abu Dhabi, United Arab Emirates, earlier this month. Furthermore, data from the Quarterly Bulletin on Public Debt reveals Mozambique’s external debt reached US$10.5 billion by the third quarter of 2024, with US$3.9 billion owed to bilateral creditors. Multilateral creditors include the International Development Association, IMF, and African Development Fund, while China, Japan, and Portugal are key bilateral lenders.
In a related financial context, the Bank of Mozambique reported a notable rise in domestic public debt for 2024, which increased by approximately US$325 million compared to the prior year. This ongoing trend reflects the broader economic pressures faced by the country and highlights the importance of financial restructuring in alleviating debt burdens and fostering economic stability.
Mozambique’s recent debt forgiveness from Iraq, amounting to US$256 million, represents a crucial step in easing the nation’s financial burdens. The rescheduling of the remaining debt over 15 years provides a structured pathway for future economic recovery, emphasizing the significance of international negotiation in managing national debt. With a total external debt of US$10.5 billion, continuous analysis and adjustment of financial strategies remain vital for sustainable development.
Original Source: clubofmozambique.com
