Mozambique: End of USAID “a significant external shock” – government

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Mozambique: End of USAID “a significant external shock” – government

7:19 CAT | 20 Aug 2025

File photo: Reuters

The Mozambican government acknowledges that the end of funding for projects in Mozambique, from the US agency USAID, “represented a significant external shock”, with impacts on health, agriculture and employment, and threatening the “collapse” of basic services.

In a document on budget execution for the first half of the year, seen by Lusa this Tuesday, the government acknowledges that the suspension of funding from the United States Agency for International Development (USAID) in January, and its subsequent closure, forced it to “redirect internal resources to prevent the collapse of basic services”.

“In this context, the government has adopted policy measures aimed at ensuring the sustainability of essential services and stimulating the national economy,” the document from the Ministry of Finance states.

“These measures include redirecting public spending, mobilizing domestic resources, supporting domestic production, strengthening social protection and improving efficiency in budget management, thus mitigating the negative impacts of the interruption of foreign aid and promoting the country’s economic and social resilience,” it adds.

Ratings agency Fitch acknowledges that the suspension of USAID support to Mozambique also had an impact on the shortage of foreign currency which is felt in Mozambique and represents 3% of Mozambican GDP, Lusa reported on August 4.

“The shortage of foreign currency increased in 2025, partly due to the decline in external disbursements to the government and the suspension of USAID,” Fitch writes in its most recent rating assessment for the country, highlighting that the US agency disbursed support to Mozambique of US$586 million (€505 million) in 2024, primarily for projects related to health and education, “equivalent to 3% of Gross Domestic Product (GDP)”.

The US government, led by Donald Trump, suspended the activities of USAID earlier this year. USAID, founded in 1961 to provide international humanitarian support, had provided significant funding for health in Mozambique. The agency’s permanent closure was announced on July 1st.

At least 2,500 jobs were lost in Mozambique with the cut in US foreign aid through USAID, according to July data from the Mozambican government, which admitted it was “a problem” for the economy.

“The last meeting I had with the group created by organizations that benefited from the funding spoke of around 2,500 jobs,” said Minister of Labour, Gender, and Social Action Ivete Alane, at the time, noting that there was no “official estimate”.

Source: Lusa