Mozambique’s economic outlook for 2025 appears promising, with the International Monetary Fund (IMF) projecting a 3.0 percent growth rate.
This follows a challenging 2024, during which economic activity suffered a sharp downturn in the final quarter due to social unrest, causing real GDP to decline significantly.
An IMF delegation, led by Mr. Pablo Lopez Murphy, visited Mozambique from February 19 to March 4, 2025, to assess the country’s fiscal and economic policies under the Extended Credit Facility (ECF)-supported program. The discussions focused on strategies to restore macroeconomic stability, enhance fiscal discipline, and support economic recovery.
At the conclusion of the visit, Mr. Lopez Murphy provided an update on Mozambique’s economic performance and policy direction:
“The IMF team has held constructive discussions with the Mozambican authorities on the fiscal, financial, and structural policies needed to support the completion of the Fifth and Sixth Reviews of the ECF arrangement.
“Economic activity contracted sharply in the last quarter of 2024, reflecting the impact of social unrest. Real GDP declined -4.9 percent (yoy) in 2024Q4 from growth of 3.7 percent (yoy) in 2024Q3. Overall growth in 2024 was 1.9 percent. For 2025, growth is projected to recover to 3.0 percent as social conditions normalize and economic activity picks up, especially in services.
“Preliminary estimates suggest that there were significant fiscal slippages in 2024 that are in part explained by the slowdown in economic activity during the last quarter. Fiscal consolidation in 2025 is necessary to secure fiscal and debt sustainability and preserve macroeconomic stability. Wage bill spending overruns continue crowding out important spending priorities including social transfers and infrastructure. Rationalizing wage bill spending and reducing tax exemptions should underpin fiscal consolidation, social spending should be prioritized, and debt management could be further strengthened to avoid arrears.
“Inflation pressures picked up but remain controlled. The Bank of Mozambique initiated a loosening cycle in January 2024, cutting the policy rate by 500bps so far (to 12.25 percent). The central bank also reduced reserve requirements on local currency deposits, from about 39 to 29 percent, in late January 2025. Despite supply-chain disruptions and higher food prices related to social unrest, inflation remained below the implicit target of 5 percent.”
During its mission, the IMF delegation engaged with key Mozambican officials, including President Daniel Chapo, Prime Minister Maria Levy, Minister of Finance Carla Loveira, and Governor of the Bank of Mozambique Rogério Zandamela. Additionally, the team held discussions with representatives from civil society, political parties, development partners, and the private sector.
Concluding the visit, Mr. Lopez Murphy expressed appreciation for Mozambique’s cooperation and reaffirmed the IMF’s commitment to supporting the country’s economic recovery. Discussions on program reviews are expected to continue in the coming weeks.
