Mozambique’s economic week was marked by developments of significant interest to the business environment.
On the positive side, the European Union (EU) reaffirmed in Maputo its commitment to continue supporting Mozambique in the areas of security, economic development, institutional strengthening, and the promotion of private investment, considering these pillars essential for ensuring sustainable growth and long-term stability in the country.
The position was presented by Portugal’s Minister for State Reform, Gonçalo Saraiva Matias, speaking on behalf of the European Union during the opening session of the 2nd Mozambique-European Union Business Forum (Global Gateway), held in Maputo on 9 and 10 June.
In his remarks, the minister highlighted that the partnership between the European Union and Mozambique has evolved significantly in recent years, moving beyond traditional development cooperation to become a strategic relationship based on investment, economic opportunity creation, and the strengthening of stability.
According to Gonçalo Saraiva Matias, the current international environment—marked by geopolitical tensions, economic challenges, climate change, and digital transformation—requires cooperation relationships founded on trust, shared responsibility, and common development objectives.
He noted that these investments are intended to stimulate economic growth, promote regional integration, create jobs, and strengthen the resilience of African economies against external shocks. He added that Portuguese direct investment in Mozambique exceeds $2.4 billion, while Portuguese exports to the Mozambican market are approaching $580 million annually.
International Reserves Decline
Data released this week showed that Mozambique’s Net International Reserves (NIR) fell by 1% in April to $3.47 billion, following the government’s decision to make a “full and early repayment” of $701.4 million to the International Monetary Fund (IMF), settling loans contracted under the Poverty Reduction and Growth Trust (PRGT).
According to the Bank of Mozambique (BdM), external reserves recorded a sharp decline from the $4.2 billion registered in February, which represented the highest level ever achieved by the country.
Previously, Finance Minister Carla Louveira revealed that the government had used the country’s Net International Reserves to repay its debt to the IMF, assuring that the decision would not compromise state institutions.
“We paid the IMF debt service using the country’s net international reserves. These are financial assets held by Mozambique, so there was no need for a budget adjustment for this purpose,” the minister stated.
The Confederation of Economic Associations (CTA) said that the repayment of Mozambique’s debt to the IMF is a “significant signal” of macroeconomic responsibility and strengthened international credibility, while also calling attention to the country’s “substantial domestic debts.”
“The private sector recognises and values the fulfilment of financial obligations to the International Monetary Fund, as it constitutes an important sign of macroeconomic responsibility and enhanced international credibility,” the organisation said in a statement.
Mozal Paid More Than €20 Million in Taxes Before March Closure
The Mozal aluminium smelter, located in Maputo Province, paid a total of €20.5 million in taxes to the Mozambican state in 2025, representing nearly 0.5% of all public revenues.
According to figures from the General State Account (CGE), cited by Lusa, the government collected almost €4.9 billion in current and capital revenues last year.
“Specifically, Mozal’s payments amounted to €8.4 million in Personal Income Tax (IRPS) and €12.1 million in withholding tax, representing close to 0.5% of total revenues,” the report clarified.
The document, which is still to be debated in Parliament, states that ten mega-projects, including Mozal, contributed €456 million in revenues to the state.
Mozambique’s largest aluminium smelter suspended operations on 15 March, entering a care and maintenance phase after failing to reach an agreement on electricity supply at competitive prices. The decision, announced by majority shareholder South32, marked the end of 25 years of continuous operations at one of the country’s most important industrial mega-projects.
The shutdown is estimated to have cost around $60 million, including severance expenses, while maintaining the facility is expected to cost approximately $5 million per year. The company justified the decision by citing the inability to secure sufficient electricity at sustainable prices after several years of negotiations with the Mozambican government, Eskom, and other stakeholders in the energy sector.
Text: Cleusia Chirindza
