Mozambique: Government approves cuts to non-priority investments

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Mozambique: Government approves cuts to non-priority investments

5:20 CAT | 26 Nov 2025

File photo: Lusa

Mozambique’s government will cut spending on non-priority investment projects in the 2026 state budget, following a downward revision of 1.3 percentage points in the economic growth previously forecast for 2025, it announced on Tuesday.

The government made the decision at a cabinet meeting on Tuesday, with the approval of a bill amending the 2026 Economic and Social Plan and State Budget (PESOE) proposal, to be submitted to the parliament, which is moving forward with cuts in investments considered non-priority, after revising this year’s economic growth downwards, thereby lowering the forecasts for revenues to be collected next year.

In the law on the 2025 PESOE, approved by the Mozambican parliament, the Government forecast economic growth of 2.9% this year, in addition to a 2.9% growth in Gross Domestic Product (GDP) (1.9% in 2024), an average annual inflation rate of 7%, exports of goods worth $8,431 million (€7,379 million) and gross international reserves of $3,442 million (€3,045 million), equivalent to 4.7 months of coverage of imports of goods and services, excluding megaprojects.

In the proposal approved yesterday by the government, the Government of Mozambique indicates that in 2025 the economy recorded a 3.9% decline in the first quarter and an average contraction of 2.4% in the first half of the year, leading to a downward revision of economic growth by 1.3 percentage points for 2025, with delayed effects in 2026, with an additional reduction of 0.4 percentage points estimated compared to initial projections.

Thus, the document states that the Government now expects to collect 361.8 billion meticais (€4.901 billion) in revenue, about 24 billion meticais (€325 million) less compared to the initial forecast, leading to a downward revision of estimates for 2026 by 14.9 billion meticais (€189 million) compared to the initial forecast.

In this context, to ensure the containment of the budget deficit, the Government has decided to adjust the main budgetary variables, focusing mainly on non-priority investment projects, while ensuring the continued financing of essential public services and fundamental social policies.

In the initial proposal for PESOE 2026, reported by Lusa, the Government forecast economic growth of 3.2% in 2026, raising GDP to 1.665 trillion meticais (€22.4 billion), following a 2.9% forecast for this year, 2.2% in 2024 and 5% in 2023.

Also in the macroeconomic assumptions of the PESOE, the Government forecasts an annual inflation rate of 3.7%, compared to 7% expected for this year and 3.2% in 2024.

In the same proposal, the Mozambican government also predicted a lower budget deficit in nominal terms over several years, falling to 113.664 billion meticais (€1.529 billion), equivalent to 6.9% of Gross Domestic Product (GDP).

Source: Lusa