Mozambique may revise its state budget in an extreme scenario if the Gulf war intensifies and triggers a broad rise in oil prices, finance minister Carla Loveira told Lusa.
“In the most extreme, adverse scenario, a budget revision could indeed be necessary,” Loveira said on Thursday in an interview with Lusa at the Mozambican embassy in Brasília, during a five-day official visit to Brazil. “Because the entire impact [of the war] on the economy — through imported inflation, through the rise in fuel prices and its effect on the cost, above all, of basic food staples — could mean that public expenditure worsens, not in quantitative terms but in value terms,” she explained.
Around 80% of Mozambique’s fuel imports transit through the Strait of Hormuz from the Middle East, and according to the finance minister, the country has fuel reserves considered sufficient until May. The government has carried out an analysis based on different supply and pricing scenarios — a baseline scenario, a favourable scenario with maintained contracts and international stability, and an adverse scenario with a worsening situation.
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Loveira said Mozambique already has fuel purchase agreements with “contracts concluded until year-end” and is working to maintain the terms of those contracts. “The exercise we are doing is to try, as far as possible, to maintain those agreed prices. But obviously, this is an uncertain scenario, which is why we have alternative scenarios,” she said.
Mozambique’s 2026 Economic and Social Plan and State Budget had projected GDP growth of around 2.8% and inflation of around 4.8%, both of which are now contingent on the development of the Middle East conflict. If the conflict persists, the government expects the pace of economic recovery to be “slower,” and in an extreme scenario where the oil price exceeds $140 per barrel, the economy could register negative growth.
The government is also studying the activation of the stabilisation fund to address the war’s social and business impacts, promising to monitor the situation to mitigate the probable shock to the national economy.
