The weight of domestic public debt has risen again and brought with it a worrying sign: the State's finances remain under heavy pressure, at a time when the financial market is beginning to feel, with greater intensity, the effects of this strain.
The most recent data show that domestic debt rose to around 487.3 billion meticais, an increase of approximately 200 million dollars compared with December 2025. The figure confirms an increasingly evident trend: the State is turning more heavily to domestic financing to meet its needs, in a context in which limitations in revenue collection persist and pressures on public spending are growing.
More than a simple accounting indicator, this development exposes the vulnerability of the fiscal framework and raises new doubts about the State's capacity for financial management in the short term.
Payment delays weaken the market
But one factor worsens this picture still further. The persistence of delays in servicing domestic debt is eroding market confidence and reducing investors' interest in public securities.
The impact is already being felt. According to the Bank of Mozambique, defaults on debt service are disrupting the regular functioning of the financial market, affecting funding dynamics and making interest rates in the interbank money market more rigid.
When the State delays payments, the effect is not limited to the public treasury. Uncertainty spreads through the system, weakens the confidence of economic agents and tends to raise the cost of sovereign borrowing. At the same time, it reduces the effectiveness of economic policy instruments, at a time when predictability is an increasingly scarce asset.
Central bank opts for prudence
It was in this environment of heightened risk that the Monetary Policy Committee decided to hold the MIMO rate at 9.25%, halting the cycle of cuts that had previously been followed.
The decision reflects a cautious reading of the situation. On one side, external factors weigh, such as the impact of the conflict in the Middle East on energy prices. On the other, significant domestic risks remain, among them climate shocks and the fiscal fragility associated with the State's payment delays.
The monetary authority has thus opted for a prudent stance, seeking to contain potential inflationary pressures in a context in which fiscal imbalances continue to pose a latent threat to economic stability.
Liquidity exists, credit does not advance
There is, however, an apparent contrast in the financial system. Despite the adverse environment, the banks continue to show comfortable levels of liquidity and solvency, which in theory should favour greater financial intermediation.
In practice, however, this is not happening with the expected intensity. Economic uncertainty, heightened fiscal risk and the more conservative stance of banking institutions are limiting the expansion of credit to the economy.
The result is a revealing paradox: there is liquidity in the system, but credit remains subdued. This mismatch reflects the banking sector's caution in an environment where risks have increased and confidence remains under pressure.
Fiscal sustainability under watch
The macro-fiscal picture therefore remains marked by weaknesses that are unlikely to disappear in the short term. The increase in domestic debt, combined with delays in servicing it, exposes serious constraints in the management of public finances and raises questions about the sustainability of the current trajectory.
In a context like this, the evolution of fiscal indicators will tend to be followed with redoubled attention by rating agencies. Should consistent signs of improvement not emerge, fresh warnings about the country's sovereign risk could gain strength.
Between need and cost
The growing reliance on domestic financing puts the State before a delicate balance. On the one hand, this resource makes it possible to mobilise funds in a situation of external limitations. On the other, it increases pressure on the domestic financial market and can generate crowding out, taking space away from the private sector and restricting financing for the productive economy.
It is here that a decisive part of macroeconomic stability is at stake. How the State manages this tension between the need for financing and the preservation of confidence will be decisive not only for the functioning of the market, but also for the country's credibility with investors.
