Mozambique’s Chapo bets on fiscal discipline to tame record debt
Facing a record public debt of $16.238 billion in 2024 up 26.2% in five years Mozambican President Daniel Chapo has chosen responsibility over recklessness. Since taking office, he has pursued a disciplined fiscal strategy built on three pillars: streamlining public spending, improving tax collection, and strengthening the state’s financial authority, with the clear goal of restoring international creditors’ confidence and laying the groundwork for sustainable growth.
On the tax front, the ambition is significant: boost state revenues from 21% to 25% of GDP by expanding the VAT base, reforming personal income tax, and digitizing tax collection to curb evasion and broaden the taxpayer base.
Revenues from mining and oil production, estimated at €102 million, reinforce this effort, with 10% directly allocated to developing producer provinces translating national wealth into local benefits.
On the spending side, a 5.3% reduction compared to 2024 reflects a determined commitment to fiscal consolidation, all the more notable given the challenging economic and security context.
This rigor is paired with pragmatic debt management. The government has prepaid $630 million owed to the IMF, well before the 2029 maturity, and is negotiating the conversion of $1.4 billion in Chinese debt into yuan, following a similar agreement already reached with Brazil.
President Chapo has prudently made any broader debt restructuring conditional on securing a new IMF program an approach that prioritizes long-term credibility over short-term solutions.
This demanding fiscal course is accompanied by a social commitment the President has reaffirmed: he recently rejected reform proposals that could have increased the cost of living for Mozambicans, insisting that fiscal consolidation must not sacrifice citizen protection.
Daniel Chapo thus demonstrates that a country can combine financial rigor, economic sovereignty, and concern for its people — three demands rarely easy to reconcile, but which he seems determined to pursue simultaneously.
