Mozambique plans 4.5% rise in 2026 State spending, nearly 70% allocated to operational expenses

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Mozambique plans 4.5% rise in 2026 State spending, nearly 70% allocated to operational expenses

1:31 CAT | 23 Oct 2025

File photo: Lusa

The Mozambican government plans to increase state spending by 4.5% in 2026, reaching a record 535.623 billion meticais (US$7.191 billion), but almost 70% of the budget is earmarked for operational expenses and only 20% for investment, according to the draft Economic and Social Plan and State Budget (PESOE) for 2026.

The proposal, approved by the government and set to go to parliament in the coming days, compares with a total budgeted expenditure of 512.749 billion meticais (US$6.884 billion) for 2025. Actual spending was 509.265 billion meticais (US$6.837 billion) in 2024 and 471.922 billion meticais (US$6.335 billion) in 2023.

Operational spending is expected to hit a new high, rising from 351.253 billion meticais (US$4.715 billion) in 2025 to 370.270 billion meticais (US$4.971 billion) in 2026, largely covering salaries and other current expenses. Budgeted investment expenditure will also reach a record 107.559 billion meticais (US$1.444 billion), up from 98.776 billion meticais (US$1.326 billion) this year. In contrast, financial operations spending is projected to fall from 62.720 billion meticais (US$842 million) in 2025 to 57.793 billion meticais (US$776 million).

State expenditure fell 4% in the second quarter compared with the same period in 2024, but the Finance Ministry warns that rising salary and debt costs, combined with weak domestic revenue mobilisation, continue to put pressure on public finances.

The 2026 PESOE projects state spending at 32.3% of estimated GDP, while revenues of 421.959 billion meticais (US$5.667 billion) will account for 25.5% of GDP.

The Finance Ministry’s latest fiscal risk monitoring report, released this month, notes that public spending “has experienced adverse dynamics recently, reflecting structural rigidity and pressures on the State Budget.”

The report highlights that the largest pressures in the second quarter came from personnel costs and debt service, accounting for 52% and 11% of total spending, respectively – a 12% rise in the wage bill and a 25% increase in debt costs compared with the same period in 2024.

In the short term, the report warns that pressure on state spending is expected to remain high due to weak domestic revenue mobilisation and the impact of reduced support from international budget and development programmes.

“This situation poses additional challenges for fiscal sustainability, requiring stricter public accounts management, clearer budgetary priorities, and strengthened fiscal discipline,” the report states.

Source: Lusa