Mozambique posts €300 million budget deficit in Q2, down €133.7 million YoY – government

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Mozambique posts €300 million budget deficit in Q2, down €133.7 million YoY – government

1:37 CAT | 14 Oct 2025

File photo: Notícias

Mozambique recorded a budget deficit of 22.45 billion meticais (over €300 million) in the second quarter of this year, down from the same period last year, but the Ministry of Finance warns of continued reliance on debt.

A Ministry of Finance fiscal risk monitoring report consulted today by Lusa acknowledges “a temporary relief of 10 billion meticais [€133.7 million] in year-on-year terms” in the second-quarter budget deficit.

“However, in a context of low tax revenue collection, the scenario may present greater challenges to ensure fiscal sustainability and consolidated growth. The persistence of fiscal imbalances, and reliance on financing, particularly internal debt, may compromise the sustainability of public finances,” the report states.

Increased exposure to risks and reduced budget space for structural investments are other risks highlighted, which require “prudent expenditure management and structural measures to expand the tax base and strengthen the capacity to mobilise domestic revenues, in order to ensure more robust and sustainable economic growth”.

On the other hand, the report points out that state revenue has shown “high deviations from what was planned, with relevant implications for the programming and financial execution of the State Budget”.

“Between 2024 and 2025, an accumulated deviation of about 43.2 billion meticais [€578 million] was recorded, equivalent to 3.5% of GDP,” the document notes.

It adds that in the second quarter, state revenue totalled 95.6 billion meticais (€1,278 million), achieving 98.6% of the programmed amount for the period, “representing a modest growth of 0.4% compared to the same period last year”.

The Mozambican government stated in September that it estimates GDP growth of 2.5% by the end of the year, recognising the return of investor confidence after the post-election unrest.

“These indicators reveal an economic recovery and a return of private investor confidence, with GDP growth expected to range between 1.9 and 2.5% by the end of the year,” said Mozambique’s Minister of Planning and Development, Salim Valá.

The minister was speaking at the Development Observatory, a consultative forum for the government and partners on development matters, where the government presented the proposed Economic and Social Plan and State Budget (PESOE) for 2026 and data on this year’s execution.

Minister Valá indicated that this growth is being supported by the revitalisation of productive activities, including the introduction of new dynamics in the productive sectors of manufacturing, agriculture, construction, tourism, transport, and services.

With the “encouraging signs” of economic recovery, also observed in this second half of the year, the government expects that the pace of economic growth will accelerate from next year, the second year of implementation of the government’s five-year plan.

According to Salim Valá, from next year the country will also “enter cruise speed towards establishing an economy based on multiple economic sectors, not overly dependent on the extractive industry, boost the processes of economic transformation and strengthen the foundations for achieving economic independence”.

The Mozambican government also forecasts moderate economic recovery around 3.2% in 2026, driven by the recovery of service sectors, expansion of liquefied natural gas exports, dynamism in agriculture, and significant investments in the energy sector.

Source: Lusa