Mozambique: Government forecasts 4.6% average annual growth in 2025-29, public debt at 61% of GDP by 2029

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Mozambique: Government forecasts 4.6% average annual growth in 2025-29, public debt at 61% of GDP by 2029

2:36 CAT | 25 Mar 2025

FILE - For illustration purposes only. [File photo: Rádio Moçambique]

The Mozambican government forecasts average annual economic growth of 4.6% of Gross Domestic Product (GDP) by 2029 and a reduction in the public debt stock from 75% of GDP to 61%, according to a report consulted by Lusa today.

The macroeconomic stability targets are included in the government’s Five-Year Programme (PQG) 2025-2029, the first drafted by the executive led by President Daniel Chapo, who took office last January and which will be discussed during the first parliamentary session of this legislature, which starts on Wednesday in Maputo.

The programme sets the target for state revenues to rise from 24.6% of GDP in 2024 to 25.4% in 2029, cutting state expenditure from 35.40% to 32.88%. The government’s forecast for the public debt stock is expected to rise from the equivalent of 74.20% of GDP in 2024 to 60.80% in 2029, based on average annual economic growth of 4.6%, including liquefied natural gas (LNG) projects, compared to 1.9% last year.

Among the first macroeconomic goals of Daniel Chapo’s Mozambique Liberation Front (Frelimo) government, is the reduction of the country’s trade deficit, from 34.46% in 2024 to 13.19% in 2029.

The International Monetary Fund (IMF) argued in early March that Mozambique needs “budgetary consolidation” in 2025 to ensure the sustainability of public accounts, given the significant fiscal slippage seen in the previous year.

“Preliminary estimates suggest significant fiscal slippages in 2024, which are partly explained by the slowdown in economic activity during the last quarter,” said Pablo Lopez Murphy, quoted in an IMF statement on the review carried out under the Extended Credit Facility (ECF).

“Fiscal consolidation in 2025 is necessary to ensure fiscal and debt sustainability and preserve macroeconomic stability,” added Murphy, who led the IMF team and discussions with the Mozambican authorities, including the President of the Republic and the Prime Minister, from February 19 to March 4, referring to the policies that underpin the fifth and sixth reviews under the ECF.

He also stressed that “slippages in payroll expenditures continue to crowd out important spending priorities, including social transfers and infrastructure,” advocating “rationalizing payroll spending and reducing tax exemptions.”

The IMF also noted that economic activity in Mozambique “contracted sharply in the last quarter of 2024, reflecting the impact of social unrest”, in the context of the post-election protests in the country, leading to a 4.9% drop in GDP in the fourth quarter, putting overall growth last year at 1.9%.

“For 2025, growth is expected to recover to 3.0% as social conditions normalize and economic activity recovers, especially in services,” reads the IMF forecast.

Source: Lusa