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, says the International Monetary Fund (IMF).
This is indicated after IMF staff team led by Mr. Pablo Lopez Murphy visited the country and conducted discussions with the authorities from August 21-29, 2025. The discussion was focused on the fiscal, financial, and structural policies needed to underpin macroeconomic and financial stability, generate jobs, and enhance medium-term growth, according to the IMF press statement. “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,” he said.
Indicating the the discussions will continue, Mr. Lopez Murphy issued the following statement At the end of the his team’s visit:
“Inflation remains contained amid tight financial conditions. 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 also reduced reserve requirements on local currency deposits, from about 39 to 29 percent, in late January 2025, providing further support to the economy.”
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“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,” he said.
“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 persisted not only due to subdued tax revenues —affected by the slowdown in economic activity—but also because government expenditures continued to grow at a faster pace, further widening the gap.”
“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. Front-loaded fiscal consolidation is warranted to restore fiscal sustainability, reduce financing needs, and put debt on a clear downward path to reduce debt vulnerabilities, while creating 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.”
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