Mozambique’s debt is currently in distress, and total public debt is on an unsustainable path.
Large portion of the Mozambique debt is foreign currency dominated debt, hence, the debt dynamics are susceptible to fiscal policy slippages, tighter financing conditions and external exchange rate shocks. On that note, there is a call for prudent fiscal policy to rein in public debt. The government should direct resources from debt to capital projects that have ability to payback and also towards
productive sectors of the economy, contrary to funding recurrent expenditure. There has been a significant rise in domestic debt, constituting a large share of the total public debt. Hence, the government should formulate and implement prudent domestic debt management strategies to mitigate the effects of rising debt on the economy.
