Iraq has forgiven $256 million of oil debt that Mozambique had owed for decades, according to the Ministry of Finance in the Southeast African country.

Mozambique was indebted to Iraq with a total amount of $320.2 million and will pay the remaining balance of $64 million over 15 years starting from 2029.

This debt stems from an oil supply deal in 1979 and 1980. The Ministry of Finance mentioned that the debt forgiveness came after negotiations this month held in Abu Dhabi.

The gas-rich country is struggling with an increasing debt burden. On February 7, Fitch Ratings downgraded Mozambique's foreign currency credit rating to "CCC" from "CCC+," citing persistent political and social unrest affecting government revenues amid rising financial needs and uncertainty regarding external funding.