• Fitch says debt restructuring could come before any new IMF program

• Public debt near 91% of GDP keeps pressure on finances

• LNG project fuels long-term optimism despite short-term strain

Mozambique may have to restructure its public debt before securing a new financing agreement with the International Monetary Fund, Fitch Ratings said on April 20.

The agency noted that while a new IMF program remains possible this year, it could depend on prior adjustments to the country’s debt burden, which international lenders consider unsustainable. The warning comes as Mozambique faces growing financial strain and limited access to external funding.

Signs of a possible restructuring

Fitch points to the government’s recent hiring of financial advisers as an early signal of a potential restructuring. “This suggests that a debt restructuring is possible before an agreement is reached,” said Gabriel Comolet, an analyst at Fitch, in a note published April 17.

Although repayments on Mozambique’s only eurobond remain manageable for now, Fitch warns that liquidity pressures could quickly return without IMF support. The country operates in a tightening financing environment, with constrained access to foreign capital and heavy reliance on domestic markets.

An economy under pressure

In January, Fitch reaffirmed Mozambique’s credit rating at “CCC,” citing short-term financing stress and budget deficits well above those of comparable countries. Public debt is projected to reach around 91% of GDP in 2025, weighing on economic prospects.

Mozambique recently made a strong gesture by fully repaying its IMF debt ahead of schedule, with a $630 million payment at the end of March 2026. While this move aims to strengthen its position in future negotiations, it does not resolve deeper structural challenges.

Gas projects offer long-term hope

Investors remain focused on the large liquefied natural gas project led by TotalEnergies. After years of delays due to insecurity in the north, work resumed in 2025, with production expected around 2029–2030. The project remains the main source of long-term optimism.

That outlook is reflected in market performance. Mozambique’s eurobond maturing in 2031 ranked among the best-performing emerging market bonds on April 20, trading at 80.73 cents on the dollar by midday in London.

Until gas revenues begin to flow, Mozambique will need to reassure its creditors. A key test is expected in 2028, when principal repayments on the eurobond begin. An orderly restructuring may be needed to maintain stability ahead of that deadline.

Fiacre E. Kakpo