Mozambique signed a complementary framework agreement with China on 26 October to reprofile its public debt-service payments to its largest bilateral creditor. Finance Minister Carla Loveira signed for Mozambique and Ambassador Zheng Xuan for China in Maputo, the finance ministry said. Two days later the ministry said it would seek further relief from bilateral creditors while avoiding a comprehensive restructuring of its debt where possible, Reuters reported.
The ministry said the China deal falls under its Medium-Term Public Debt Management Strategy 2025–2029 and is meant to align debt payments with the country’s financial capacity. Loveira said its main effect would be to ease immediate pressure on the state budget. Implementation still requires formal instruments with the Export-Import Bank of China, and neither government has published the amount of debt covered, the new maturities or any change in interest.
In its 28 October statement the ministry said Mozambique was “prioritising negotiated solutions aimed at improving the repayment profile” and planned talks with bilateral creditors on converting debt into investment, according to Reuters. It put the country’s additional external financing need at $528 million, on top of an IMF programme the government hopes to secure. Mozambique’s international bonds were bid at 91.614 cents on the dollar on 29 October, up 0.3 cents, according to Tradeweb data cited in the same report.
Some reports described the China deal as a restructuring of Mozambique’s debt. The ministry’s own description covers the reprofiling of debt-service payments; it has announced no reduction in principal, and its 28 October statement says it wants to avoid a comprehensive restructuring as far as possible.
Reuters, citing official data, put the debt owed to China at about $1.28 billion at the end of June, nearly 15% of Mozambique’s external debt. Ministry figures carried by Lusa put it at $1.347 billion for the same date; the two figures have not been reconciled publicly. Public and publicly guaranteed debt stood at 75.9% of GDP at the end of June, according to the ministry figures.
The China agreement follows a bilateral deal with Brazil. In April, Brazil’s Senate approved the restructuring of $143 million owed by Mozambique; after an initial payment, the balance is to be repaid in ten semi-annual instalments at a fixed annual interest rate of 3.625%, the finance ministry said.
The search for financing comes after Mozambique cleared its outstanding IMF credit of 515.04 million special drawing rights, about $630 million, in March, ahead of schedule, IMF credit data show. An IMF mission led by Pablo López Murphy was in Maputo in September to discuss a possible Extended Credit Facility, and the ministry said it was aiming for a staff-level agreement and approval by the Fund’s executive board by the end of 2026. A joint World Bank and IMF analysis has assessed Mozambique’s debt as unsustainable. The country’s debt problems date to the hidden-debt scandal that surfaced in 2016, and delays to large natural gas projects have added to the strain.
Mozambique is dealing with its creditors one at a time: Brazil in April, China in October, with debt-for-investment talks to follow. That approach spreads out near-term payments and has so far not involved bondholders, but it leaves unchanged a debt stock that the World Bank and IMF consider unsustainable. The question for investors and for the Fund is whether rescheduled bilateral payments and debt swaps can close a $528 million financing gap and support a new programme without a broader treatment of the debt.
The size of the debt covered by the China agreement and its new repayment terms have not been disclosed. The next marker is the IMF staff-level agreement that the government is targeting before the end of the year.
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