Mozambique’s economy was marked this week by several significant developments: projections for Gross Domestic Product (GDP) growth in 2026, anticipated changes in the benchmark interest rate, government warnings on fiscal risks, and expectations of a record increase in state expenditure on salaries. These indicators provide a comprehensive view of the country’s economic situation and future challenges.
Economic Growth and GDP Outlook
The government projects economic growth of 3.2% in 2026, according to the budget proposal for that year, which estimates the GDP at 1.6 trillion meticais (23.5 billion dollars). This projection represents a slight acceleration compared to 2.9% forecast for 2025 and 2.2% recorded in 2024, years marked by post-election political instability. In 2023, economic growth was 5%. For 2025, the nominal GDP is estimated at 1.5 trillion meticais (21.8 billion dollars), while in 2024 it was 1.4 trillion meticais (20.5 billion dollars). Inflation is expected to be 3.7% in 2026, lower than the 7% projected for 2025 and 3.2% recorded in 2024. Net International Reserves are expected to cover 4.4 months of imports, slightly below the 4.7 months estimated for 2025.
In trade, exports are expected to rise from 8.2 billion dollars in 2025 to 8.4 billion dollars in 2026, while imports are projected to increase from 9.2 billion dollars to 9.5 billion dollars, maintaining the trade deficit.
Benchmark Interest Rate and Monetary Policy
The British consultancy Oxford Economics anticipates that the Bank of Mozambique may again reduce the benchmark interest rate in November if inflation remains moderate—following the recent cut to 9.75%.
“If inflation stays below the 5% target, the Monetary Policy Committee could reduce the rate by 0.5 percentage points at the end of November,” the analysts indicate. In August, inflation was 4.8%, below the implicit 5% target set by the central bank under the International Monetary Fund (IMF) program.
Since January 2024, the Bank of Mozambique has cut the policy rate by 700 basis points, benefiting households, businesses, and the state. However, commercial bank rates for customers have only fallen by about 600 basis points during the same period.
Fiscal Risks and Budget Deficit
In the second quarter, Mozambique recorded a budget deficit of 22.45 billion meticais (320 million dollars), according to the Fiscal Risk Monitoring Report from the Ministry of Finance. Although lower than the deficit for the same period in 2024, the government warns of structural risks that may affect the sustainability of public finances.
The deficit represents a temporary relief of 10 billion meticais (143 million dollars), but low tax revenue collection and reliance on borrowing, especially domestic debt, could compromise fiscal consolidation efforts.
State Expenditure on Salaries
The government expects that salary expenses will reach a record 211.8 billion meticais (2.9 billion dollars) in 2026, a 3% increase compared to the 2025 budget projection. Salaries and wages will account for 12.8% of the estimated GDP, including planned hires in Education, Health, Agriculture, and Justice Administration sectors.
To control the payroll, the State Human Resources Management System (e-SNGRHE) has been implemented, requiring annual biometric proof of life for public employees through the mobile application BioPV. Non-compliance results in automatic suspension of salary payments. So far, 18,899 employees have been suspended for failing to meet this requirement.
Text: Florença Nhabinde
