Mozambique clears IMF debt as African nations cut foreign borrowing

Mozambique has fully repaid its $701 million debt to the International Monetary Fund, a rare move among African economies working to ease pressure from external borrowing and tighten public finances.

The payment, disclosed in a research note by Standard Bank, clears Mozambique’s balance with the Washington-based lender and brings an end to its outstanding obligations.

It also led to the cancellation of an IMF mission planned for August, a sign that relations with the Fund are entering a quieter phase.

Figures on the IMF’s data portal show Mozambique’s balance has dropped to zero, backing up the bank’s findings.

The timing is notable, as the country has faced growing questions in recent months over its debt levels and exposure to large energy projects.

Those concerns were flagged earlier this year.

The IMF warned in February that Mozambique’s debt situation was under strain, while the World Bank said in March that economic pressures could put as much as $50 billion in gas investments at risk.

*Mozambique clears $701 million IMF debt as African nations cut borrowing*

Reserves face pressure after repayment

Mozambique went into the repayment with a relatively strong buffer.

Foreign exchange reserves stood at about $4.15 billion in January, close to historic highs.

But that cushion is expected to thin.

Standard Bank estimates reserves could fall to around $3.5 billion after the payment, even as the country continues to accumulate arrears with other lenders.

That leaves policymakers balancing debt reduction with the need to keep external buffers intact.

Africa shifts away from IMF borrowing

Mozambique’s move mirrors a broader pattern across the continent.

Governments are gradually cutting back on IMF exposure after leaning on emergency funding during the pandemic and a period of high global interest rates.