Mozambique’s economy is expected to gain momentum in 2025, with gross domestic product (GDP) growth projected at 2.5 percent, driven largely by a recovery in the services sector, according to the International Monetary Fund (IMF).
The forecast follows a visit by an IMF staff team led by Mr. Pablo Lopez Murphy, who held discussions with Mozambican authorities between August 21 and 29, 2025.
Talks focused on fiscal, financial and structural policies needed to stabilise the economy, create jobs and support medium-term growth.
“There are emerging signs of increased interest from foreign investors across a broad range of sectors.
In this context, addressing macroeconomic imbalances is essential to unlock the full potential of foreign direct investment and sustain investor confidence,” Mr. Lopez Murphy said.
He noted that inflation remains contained despite tight financial conditions. As of July, inflation stood at 4 percent year-on-year, below the implicit target of 5 percent.
The Bank of Mozambique began easing its monetary policy in January 2024, cutting the policy rate by 700 basis points to 10.25 percent, and further supported the economy by reducing reserve requirements on local currency deposits from about 39 to 29 percent in January 2025.
The IMF highlighted that the current account deficit in the first half of 2025 was $1.3 billion, constrained by foreign exchange shortages affecting imports. The gap between the official and parallel exchange rates widened compared to 2024.
Fiscal pressures also persisted, with the fiscal deficit reaching 2.4 percent of GDP in the first half of 2025, slightly lower than 2.8 percent in the same period last year.
Subdued tax revenues, coupled with rising government expenditures, have continued to strain the budget.
“In the face of external and fiscal imbalances, the IMF team recommended that the authorities take decisive action to restore macroeconomic stability, improve the growth prospects of the economy, facilitate job creation, and reduce poverty,” Mr. Lopez Murphy said.
The IMF urged front-loaded fiscal consolidation to ensure fiscal sustainability, reduce debt vulnerabilities and create space for development spending while calling for greater exchange rate flexibility to ease foreign exchange pressures and correct external imbalances.
About The Author
