The economic week in Mozambique was marked by simultaneous signals of monetary stimulus, strengthened external financing, the resumption of major energy investments, and efforts to restore critical infrastructure affected by climate events. The period revealed a combination of financial easing policies, prospects for multilateral capital inflows, and structural progress in strategic sectors, while challenges related to domestic debt and climate vulnerability persist.
On the monetary front, the Bank of Mozambique again reduced its key interest rate, setting the MIMO rate at 9.25%, marking the 12th consecutive cut since the start of the easing cycle in January 2024. The decision, made by the Monetary Policy Committee in Maputo, is based on maintaining inflation at moderate levels and the slowdown of core inflation, supported by exchange rate stability and moderation of international prices.
Still, the central bank warned of risks associated with flooding, geopolitical tensions, and delays in domestic public debt payments—factors that continue to pressure the financial system’s liquidity. The stock of domestic debt currently exceeds $7.6 billion, increasing interbank financing costs and limiting the pace of future reference rate cuts.
In parallel, the World Bank announced plans to mobilize around $2.5 billion for Mozambique over the next five years under the new Country Partnership Framework. The financing will focus on economic corridors and sectors with high job creation potential, such as energy, agribusiness, and tourism, with particular emphasis on youth and women.
The program includes guarantee instruments, blended finance, and technical assistance to attract private investment. As part of this package, an additional $450 million fund was approved to strengthen economic resilience and responses to climate and social shocks, in a strategy aimed at inclusive growth and institutional strengthening.
In the energy sector, TotalEnergies officially resumed the Mozambique LNG project on the Afungi Peninsula in Cabo Delgado province after more than four years of suspension due to armed insecurity. Valued at around $20 billion, the project is considered the largest ongoing private investment in Africa and is expected to generate an estimated $35 billion in revenues for the State over 25 years. The construction phase is projected to create approximately 17,000 jobs, predominantly filled by local labor. First exports of liquefied natural gas are now scheduled for 2029. The government has also mandated an independent audit of costs accumulated during the suspension period, while the company has reinforced security measures and logistical control in the industrial area.
In infrastructure, the President of the Republic confirmed that National Road Number 1 (N1), which was interrupted between Incoluane and 3 de Fevereiro in Gaza province due to flooding, is expected to reopen within two weeks. The N1 is considered the country’s main roadway for the movement of people and goods between the south and the center, and its restoration is seen as essential to normalize logistical and commercial chains.
Meanwhile, international partners continue to send humanitarian aid to affected areas, while the National Institute for Disaster Risk Management reports dozens of deaths and over one hundred thousand people affected by the ongoing rainy season. The government acknowledges budgetary limitations for the contingency plan, reinforcing reliance on external support and highlighting the fiscal pressure associated with extreme climate events.
Text: Felisberto Ruco
