MAPUTO, Mozambique (BG) – Mozambique’s economy is expected to recover in 2025, with growth projected at 3% as social conditions stabilize and economic activity, particularly in the services sector, picks up, according to the International Monetary Fund (IMF).

An IMF team, led by Pablo Lopez Murphy, recently concluded discussions with Mozambican authorities as part of the Fifth and Sixth Reviews under the Extended Credit Facility (ECF).

The discussions covered fiscal, financial, and structural policies necessary for economic recovery.

“Economic activity contracted sharply in the last quarter of 2024, reflecting the impact of social unrest,” Murphy said. “Real GDP declined -4.9 % (yoy) in 2024Q4 from growth of 3.7 % (yoy) in 2024Q3. The overall growth in 2024 was 1.9 %.”

“For 2025, growth is projected to recover to 3.0 % as social conditions normalize and economic activity picks up, especially in services,” the IMF official said.

While fiscal challenges remain, the IMF emphasized the need for fiscal consolidation in 2025 to ensure sustainability.

“Wage bill spending overruns continue crowding out important spending priorities, including social transfers and infrastructure,” Lopez Murphy noted.

The IMF recommended rationalizing wage expenditures, reducing tax exemptions, and strengthening debt management.

Inflation pressures have risen but remain controlled, with the Bank of Mozambique reducing interest rates and reserve requirements to support economic activity.

According to the IMF, despite supply-chain disruptions and higher food prices linked to recent social unrest, inflation stayed below the implicit 5% target.

The IMF team met with President Daniel Chapo, Prime Minister Maria Levy, Minister of Finance Carla Loveira, central bank officials, and representatives from civil society, political parties, and the private sector.

Discussions on Mozambique’s economic program will continue in the coming weeks.