An International Monetary Fund (IMF) team, led by Pablo Lopez Murphy, visited Mozambique from February 19 to March 4, 2025. The purpose of the visit was to discuss policies related to the Fifth and Sixth Reviews under the Extended Credit Facility (ECF)-supported arrangement with Mozambican authorities.
At the conclusion of the visit, Mr. Lopez Murphy stated: "The IMF team has held constructive discussions with the Mozambican authorities on the fiscal, financial, and structural policies needed to support the completion of the Fifth and Sixth Reviews of the ECF arrangement."
Economic activity in Mozambique experienced a significant downturn in late 2024 due to social unrest. Real GDP fell by 4.9 percent year-on-year in the fourth quarter of 2024 after a growth rate of 3.7 percent year-on-year in the third quarter. Overall growth for 2024 was recorded at 1.9 percent. However, growth is expected to rebound to 3.0 percent in 2025 as social conditions stabilize and economic activities increase, particularly in services.
Preliminary data indicates notable fiscal slippages in 2024, partly due to reduced economic activity during its last quarter. Mr. Lopez Murphy emphasized that "fiscal consolidation in 2025 is necessary to secure fiscal and debt sustainability and preserve macroeconomic stability." He highlighted issues such as wage bill spending overruns impacting other priorities like social transfers and infrastructure investment.
Inflation pressures have increased but remain manageable. The Bank of Mozambique began easing monetary policy in January 2024 by reducing interest rates by a total of 500 basis points to reach a policy rate of 12.25 percent. Additionally, reserve requirements on local currency deposits were lowered from about 39 percent to 29 percent by late January 2025.
Despite challenges such as supply-chain disruptions and rising food prices linked to social unrest, inflation stayed below an implicit target of five percent.
During their mission, IMF staff met with President Daniel Chapo, Prime Minister Maria Levy, Minister of Finance Carla Loveira, Governor Rogério Zandamela from the Bank of Mozambique, along with other senior officials and representatives from civil society groups, political parties, development partners, and private sector stakeholders.
Mr. Lopez Murphy expressed gratitude towards Mozambican authorities for their cooperation during discussions: "The team wishes to thank the Mozambican authorities for their excellent cooperation and for the frank and constructive dialogue during the mission." He noted that discussions concerning program reviews would continue over upcoming weeks.