In its Article IV consultation, the IMF noted that Mozambique continues to operate in a difficult macroeconomic environment shaped by declining foreign aid, financing constraints and frequent climate shocks. While some positive developments have emerged, the institution warned that risks to economic stability remain substantial.
Economic activity has shown a gradual recovery after a sharp contraction in late 2024, which followed the country’s October elections. Inflation has remained low since late 2023, while foreign exchange reserves stood at about 6.5 months of import cover at the end of 2025.
Despite these improvements, the IMF highlighted ongoing imbalances. The current account deficit narrowed in 2025 but remains wider than levels considered sustainable. At the same time, financing conditions for the Government have tightened significantly, with domestic banks reaching limits in their ability to absorb public debt and external financing flows turning negative.
As a result, the fiscal deficit fell to about 4.5% of gross domestic product in 2025 from 6.2% in 2024, largely due to reduced spending on goods, services and capital projects. However, the IMF cautioned that fiscal deficits are likely to remain elevated over the medium term, driven by rising interest payments and continued borrowing needs.
Growth outside the mining sector is projected to remain modest at around 2%, reflecting weak credit expansion and structural constraints. The IMF also warned that inflation could rise above the central bank’s target in the coming years if fiscal pressures persist.
The organisation identified the liquefied natural gas sector as a key source of future growth, with production expected to begin around 2030. Until then, Mozambique is likely to face continued external deficits linked to large investment imports and debt servicing obligations.
IMF Directors urged authorities to implement a comprehensive reform package to strengthen fiscal discipline, improve governance and enhance economic resilience, stressing that clear communication would be essential to build public confidence and support long-term stability.
–IMF/ChannelAfrica–
