Mozambique Secures Debt Relief from Iraq
On February 12, 2025, the Ministry of Finance in Mozambique announced a significant development in its financial relationship with Iraq. The Iraqi government has agreed to forgive $256 million of the total $320.2 million owed by Mozambique for oil supplies under a deal established in 1979 and 1980. This decision comes as Mozambique grapples with substantial economic challenges.
The remaining balance of $64 million will be settled over a period of 15 years, beginning in 2029. This concession follows negotiations held earlier this month in Abu Dhabi, during which both parties sought to alleviate Mozambique’s financial burdens in light of ongoing economic struggles exacerbated by mounting debts and domestic unrest.
Despite being rich in natural gas reserves, Mozambique is facing a growing debt crisis. The international credit rating agency Fitch downgraded the country’s foreign currency rating from “CCC+” to “CCC” on February 7, citing the adverse effects of political instability and social turmoil on government revenues. The current economic landscape also reflects increasing financing demands and uncertainty regarding external financial support.
This debt restructuring arrangement highlights the heightened urgency for Mozambique to stabilize its economy while managing its existing obligations effectively. The outcome of this agreement may serve as a crucial step toward addressing the country’s pressing financial issues in the coming years.
