Carla Louveira, Mozambique’s newly appointed finance minister, has stepped into a challenging role, inheriting a treasury strained by months of post-election turmoil, a potential debt restructuring, and a public sector wage strike, Bloomberg reports.
The southeast African nation is grappling with the fallout of widespread unrest following the October elections, which resulted in at least 314 deaths and a significant economic slowdown. Even prior to the election-related violence, the government struggled to meet its financial obligations. Louveira’s new administration, inaugurated last week, now faces the daunting task of stabilizing the country’s precarious finances.
Louveira, a seasoned economist with experience as a deputy minister and central bank director, is facing her toughest challenge yet. She has already indicated that the government is considering restructuring its public debt, which was projected to reach 96% of gross domestic product last year. While she has not specified whether the restructuring will encompass both domestic and foreign liabilities, she stated that “this is work that is ongoing.”
The demonstrations against the election outcome, which extended the governing party’s 49-year rule and secured the presidency for Daniel Chapo, have reportedly cost the government some $664 million in lost revenue. Chapo has signaled that public servants will bear the initial burden of austerity measures, with plans to save about $266 million by reducing the size of government, including the number of ministries.
The government also plans to continue with its public wage bill reforms, which were initiated under an International Monetary Fund (IMF) program set to conclude in March 2025, but which is already running months behind schedule.
Mozambique is facing over $1.7 billion in debt-servicing costs this year, with roughly half owed to external creditors. The largest portion of external debt, at $395 million, is owed to bilateral creditors, with China as the largest holder. The nation must also make coupon payments totaling $81 million this year on its $900 million eurobond due in 2031. Those notes experienced a sharp decline on Monday, falling as much as 3.7% to 81.9 cents on the dollar.
This situation highlights a broader trend of instability in sub-Saharan Africa. An IMF report in October identified a resurgence of civil unrest, fueled by perceptions of economic exclusion, wasteful spending, and corruption, as factors contributing to structural fragility in the region.
