International lender calls for decisive action as debt vulnerabilities deepen
The International Monetary Fund has called on Mozambique to intensify fiscal reforms, warning that rising debt risks and financing pressures could undermine macroeconomic stability if corrective measures are delayed.
In its latest assessment of the country’s economic performance, the IMF acknowledged progress in narrowing the fiscal deficit but cautioned that underlying vulnerabilities remain significant. Interest payments on public debt continue to consume a growing share of government revenues, while limited access to affordable external financing has increased reliance on domestic borrowing, placing pressure on local financial markets.
The Fund stressed that Mozambique must move beyond short-term adjustments and implement sustained fiscal consolidation. Key priorities include containing the public wage bill, improving efficiency in public spending, and broadening the tax base to mobilize more domestic revenue. Strengthening public financial management systems and enhancing debt transparency were also highlighted as critical steps toward restoring investor confidence.
Although inflation has eased and growth prospects show gradual improvement, partly supported by expectations surrounding liquefied natural gas developments, the IMF warned that risks remain elevated. Security concerns in parts of the country, vulnerability to climate-related shocks, and global economic uncertainty continue to weigh on the outlook.
The IMF further underscored the importance of protecting vulnerable households during reform implementation, noting that fiscal adjustment must be balanced with social spending priorities to avoid worsening poverty and inequality.
Recent remarks by President Daniel Chapo suggesting possible discussions with international partners over debt obligations have added to market scrutiny. Analysts say a credible and transparent fiscal roadmap will be essential to reassure both domestic and international stakeholders.
The Fund concluded that accelerating structural reforms now would help Mozambique place its debt on a more sustainable path, strengthen economic resilience, and create the fiscal space needed to support long-term development goals.
