• IMF staff and the Mozambican authorities have discussed performance and policies underpinning the Fifth and Sixth Reviews of the Extended Credit Facility (ECF) arrangement. Discussions were fruitful and will continue virtually in the coming weeks.

An International Monetary Fund (IMF) team, led by Mr. Pablo Lopez Murphy, conducted discussions from February 19 to March 4, 2025, with the Mozambican authorities on policies underpinning the Fifth and Sixth Reviews under the Extended Credit Facility (ECF)-supported arrangement.  

At the end of the IMF team’s visit, Mr. Lopez Murphy issued the following statement:

“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 contracted sharply in the last quarter of 2024, reflecting the impact of social unrest. Real GDP declined -4.9 percent (yoy) in 2024Q4 from growth of 3.7 percent (yoy) in 2024Q3. Overall growth in 2024 was 1.9 percent. For 2025, growth is projected to recover to 3.0 percent as social conditions normalize and economic activity picks up, especially in services.

“Preliminary estimates suggest that there were significant fiscal slippages in 2024 that are in part explained by the slowdown in economic activity during the last quarter. Fiscal consolidation in 2025 is necessary to secure fiscal and debt sustainability and preserve macroeconomic stability. Wage bill spending overruns continue crowding out important spending priorities including social transfers and infrastructure. Rationalizing wage bill spending and reducing tax exemptions should underpin fiscal consolidation, social spending should be prioritized, and debt management could be further strengthened to avoid arrears.

“Inflation pressures picked up but remain controlled. The Bank of Mozambique initiated a loosening cycle in January 2024, cutting the policy rate by 500bps so far (to 12.25 percent). The central bank also reduced reserve requirements on local currency deposits, from about 39 to 29 percent, in late January 2025. Despite supply-chain disruptions and higher food prices related to social unrest, inflation remained below the implicit target of 5 percent.

“The IMF staff team met with President Daniel Chapo, Prime Minister Maria Levy, Minister of Finance Carla Loveira, Governor of the Bank of Mozambique Rogério Zandamela, and other senior officials. The mission also met with representatives of civil society, political parties, development partners, and the private sector.

“The team wishes to thank the Mozambican authorities for their excellent cooperation and for the frank and constructive dialogue during the mission. Discussions related to the program reviews will continue in the coming weeks.”