IMF Staff Completes Visit to Mozambique

IMF News, August 29, 2025

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IMF staff team led by Mr. Pablo Lopez Murphy conducted discussions from August 21-29 with the Mozambican authorities.
Press Release No. 25/285.
End-of-Mission press release: views are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.

"Economic activity is gradually recovering after a sharp slowdown between October 2024 and March 2025."
Tax revenue increased by 2.6 percent year on year in the second quarter of 2025, rebounding from a 4.2 percent decline in the first quarter.
For 2025, GDP growth is projected to reach 2.5 percent as economic activity picks up, especially in the second half of the year, driven by the recovery in the services sector.
Inflation was at 4 percent year on year in July, below the implicit target of 5 percent.
The Bank of Mozambique initiated a loosening cycle in January 2024, cutting the policy rate by 700 basis points so far (to 10.25 percent).
The central bank reduced reserve requirements on local currency deposits from about 39 to 29 percent in late January 2025.

"The current account deficit in the first half of 2025 remained subdued at $1.3 billion, reflecting tight financial conditions and foreign exchange shortages that weigh on imports."
The spread between the official and the parallel exchange rates was higher in the first half of 2025 compared to 2024.
Foreign exchange shortages noted as a factor weighing on imports.

The fiscal deficit reached 2.4 percent of full year GDP in the first half of 2025 compared to 2.8 percent in the first half of 2024.
Fiscal pressures persist due to subdued tax revenues and government expenditures continuing to grow at a faster pace, further widening the gap.

Front-loaded fiscal consolidation is warranted to:
- restore fiscal sustainability,
- reduce financing needs,
- put debt on a clear downward path to reduce debt vulnerabilities,
- create fiscal space to support development and protect the most vulnerable.
Greater exchange rate flexibility is needed to:
- relieve FX pressures, and
- facilitate the reduction of external imbalances.
Decisive action recommended to:
- restore macroeconomic stability,
- improve growth prospects,
- facilitate job creation, and
- reduce poverty.
Addressing macroeconomic imbalances is essential to unlock the full potential of foreign direct investment and sustain investor confidence; "there are emerging signs of increased interest from foreign investors across a broad range of sectors."

IMF team met with Minister of Finance Carla Loveira, Board Member of the Bank of Mozambique Jamal Omar, and other senior officials; also met with development partners and the private sector.
"Discussions on these topics, and possible options for Fund support, were fruitful and will continue in the coming months."
"The team wishes to thank the Mozambican authorities for their excellent cooperation and for the frank and constructive dialogue during the mission. Discussions will continue in the coming months."

Source: IMF Staff Completes Visit to Mozambique — Press Release No. 25/285 (August 29, 2025).