The World Bank is exploring “all options” to help Mozambique tackle mounting debt pressures, as rising borrowing costs underscore growing strain on the country’s finances, a senior official said.
Mozambique is grappling with a combination of high debt levels, weak economic growth and the lingering impact of climate shocks, which have complicated efforts to stabilise the economy. The situation has been further exacerbated by global geopolitical tensions, which have pushed up financing costs for many emerging markets.
A recent Debt Sustainability Analysis conducted jointly by the World Bank and the International Monetary Fund found that Mozambique’s debt is unsustainable, highlighting the urgency of corrective measures.
“The government is very well aware of this and working very closely to see how we can help them address some of these imbalances, looking at all options,” said Fily Sissoko, the World Bank’s regional director for Mozambique.
The World Bank is already preparing a support package of about $6 billion over five years, largely in concessional financing aimed at easing the country’s debt burden while supporting development priorities. In addition, up to $4 billion in private sector investment could be mobilised through the bank’s affiliates, including the International Finance Corporation and the Multilateral Investment Guarantee Agency.
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Mozambique’s rising debt stress has been reflected in market indicators. Its sovereign spread — the premium investors demand to hold its hard-currency debt over U.S. Treasuries — has climbed above 1,000 basis points, reaching its highest level since May 2025, according to data from JPMorgan.
The increase signals heightened investor concern about the country’s ability to meet its debt obligations and comes amid a broader retreat from emerging market assets. Analysts say the shift has been partly driven by global uncertainty, including the ongoing conflict in the Middle East, which has made investors more risk-averse.
Despite the challenges, Mozambique’s economic outlook could receive a boost from the restart of major liquefied natural gas projects, which are seen as a key driver of future growth and revenue. The country holds significant offshore gas reserves, and renewed activity in the sector could help strengthen public finances over the medium term.
However, analysts caution that translating resource wealth into sustainable economic gains will depend on sound fiscal management and continued support from international partners. For now, Mozambique remains under pressure to implement reforms and secure financing solutions that can restore debt sustainability and rebuild investor confidence.
