Republic of Mozambique: 2025 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Mozambique

International Monetary Fund

No 2026/045, IMF Staff Country Reports from International Monetary Fund

Abstract: The 2025 Article IV Consultation highlights that Mozambique continues to face a complex macroeconomic environment marked by subdued growth, fiscal and debt vulnerabilities, and declining foreign aid. On the economic front, growth has been lackluster, while high and persistent fiscal deficits have become increasingly difficult to finance. Under current policies, public debt is assessed as unsustainable and the external position is substantially weaker than the level implied by medium-term fundamentals and desirable policies. Front-loaded fiscal consolidation is essential to restore fiscal sustainability and reduce debt vulnerabilities, while creating fiscal space for development and safety nets for the most vulnerable. While inflationary expectations are well anchored and growth is below potential, room for easing tight monetary conditions is limited due to exchange rate rigidities and the risk of aggravating foreign exchange shortages. The central bank should closely monitor financial stability, conduct stress tests, and deploy bank resolution frameworks as needed. Strengthening governance, transparency, accountability, and the rule of law is critical for fostering a predictable business environment that can attract investment and create jobs.

Keywords: financing needs; market intelligence; monetary policy operation; exchange restriction; arrears financing; Debt sustainability analysis; Debt service; Global (search for similar items in EconPapers)
Pages: 104
Date: 2026-02-19
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