In the conclusions of the Article IV consultation with Mozambique, approved by the executive board and released by the institution, the IMF notes that the “government faces increasingly difficult financing conditions,” specifically citing “delays in debt servicing.”
“The holding of government bonds by national banks—the main source of funding for large and persistent budget deficits—has stagnated. Net external financing has been negative. Given these restrictive financing conditions, it is estimated that the budget deficit will have significantly decreased in 2025, dropping to 4.5% of GDP from 6.2% in 2024, mainly due to reduced expenditures on goods, services, and capital projects,” states the IMF.
It also emphasizes that Mozambique “continues to face a complex macroeconomic environment, characterized by moderate growth, budget and debt vulnerabilities, and a decrease in external aid.” “At the same time, the country faces pressing development needs, capacity limitations, and frequent natural disasters,” it reads.
After economic growth of 2.1% in 2024 and 5.4% in 2023, the IMF estimates that Mozambique’s Gross Domestic Product (GDP) grew by only 0.5% in 2025. “Economic activity has been gradually recovering after the severe contraction at the end of 2024, following the elections in October 2024,” notes the IMF regarding the four consecutive quarters of economic decline triggered by post-election unrest.
The IMF acknowledges that “despite some positive developments,” such as “low inflation,” “adequate foreign exchange reserves,” the resumption of the TotalEnergies natural gas mega project, and the removal from the gray list of the Financial Action Task Force (FATF), “challenges remain significant.”
It states that “current macroeconomic policies,” particularly “large budget deficits and the need for greater exchange rate flexibility,” are likely to “exacerbate macroeconomic and debt vulnerabilities.”
Primary budget deficits are projected to be around 2% of GDP until 2029, but total deficits are expected to increase due to rising interest payments. Economic growth outside the mining sector is expected to remain modest, around 2%, reflecting weak credit growth,” the IMF adds.
In the conclusions approved by the executive board, IMF directors emphasize “the substantial risks and vulnerabilities arising from large internal and external imbalances, weak growth, high public debt, security challenges, institutional fragilities, and climate shocks” that Mozambique faces.
They highlight “the urgency for a comprehensive political reform package to consolidate macroeconomic stability and lay the foundations for stronger and more sustainable growth,” as well as the “critical need for an ambitious and credible fiscal consolidation to help reduce financing needs and restore debt sustainability, as well as to create fiscal space to finance vital social and developmental needs.”
Additionally, they stress “the importance of containing the wage bill, broadening the tax base, improving public finance management, addressing fiscal risks from state-owned enterprises and social security systems, and strengthening debt management and transparency while protecting vulnerable groups.”
