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African News Herald > Blog > Business > Mozambique weighs joining African countries eyeing Chinese debt relief
Business

Mozambique weighs joining African countries eyeing Chinese debt relief

ANH Team
Last updated: July 7, 2025 3:18 am
ANH Team
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Mozambique is facing financial difficulties and is considering approaching China, its largest bilateral creditor, to restructure $1.4 billion in debt, according to President Daniel Chapo. The country has been struggling with economic contractions and unrest following disputed elections, leading to significant fiscal strain.

The violence in Mozambique has caused damage to businesses and infrastructure, resulting in a decrease in public revenues. With the economy still fragile, there is mounting pressure on the government to meet its external debt obligations, raising concerns about debt sustainability. Some bilateral lenders have shown willingness to support Mozambique, including the possibility of debt forgiveness.

President Chapo mentioned that rescheduling or forgiving the debt with China, Mozambique’s largest creditor, is a possibility. This would be done within the framework of partnership and existing agreements, as the country aims to honor its commitments. If this plan moves forward, Mozambique will join other African nations like Ghana, Zambia, and Ethiopia in restructuring their debts due to high borrowing costs and strained finances.

China currently holds about 14% of Mozambique’s external public debt, totaling around $9.8 billion as of the end of 2024. Formal talks with China have not yet begun, but the government is seeking to engage with strategic development partners to restructure its debt. President Chapo emphasized the importance of easing pressure through this restructuring process.

In addition to approaching China, Mozambique has also reached out to the International Monetary Fund (IMF) for a new funded program. After walking away from a previous arrangement earlier this year, citing policy misalignment with the new administration, the country is now looking to secure a new deal within months. President Chapo expressed optimism about the potential for a new agreement with the IMF.

See also  Access Holdings Reports 10% Profit And Rising Funding Costs

Overall, Mozambique is exploring various options to address its financial challenges and restructure its debt in collaboration with key partners. The government is committed to finding sustainable solutions to alleviate the economic pressures facing the nation.

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