Mozambique’s economic week opened with downgraded national growth forecasts, advances in aviation, and approval of key energy investments.
Overall, the days were marked by Oxford Economics’ downward revision of the country’s 2025 GDP growth projection to just 1.8%. According to the consultancy, this limited scenario will weaken private sector activity throughout the year, despite a favorable monetary environment.
“We now project the economy to grow by a modest 1.8% in 2025, down from our previous forecast of 2.0%. The private sector has struggled to regain momentum after post-election unrest hurt economic activity in the last quarter of 2024,” the firm stated, noting that the economy slipped into recession following the violence that erupted after the election results were announced.
Inflation is expected to ease to 4.5% this year, reflecting a stable single-digit trend partly driven by lower interest rates. However, Oxford Economics warned that foreign exchange liquidity issues, weak business confidence, damaged infrastructure, and lingering financial effects of social unrest will weigh on business activity, keeping PMI indicators around the 50-point mark in the coming months.
LAM Rejoins IATA Settlement System
There was also good news in aviation: Mozambique Airlines (LAM) was reinstated in the International Air Transport Association (IATA) settlement system, after settling its outstanding financial obligations.
The company announced that reinstatement became effective on October 2, following full compliance with financial commitments under its ongoing restructuring process.
IATA manages the centralized clearing system for global airlines, handling transactions such as ticket sales, cargo transport, maintenance services, and airport fees. LAM’s readmission enables the airline to make and receive international payments more efficiently, strengthening its financial and operational credibility.
While LAM did not disclose the amounts involved, Finance Ministry data show the airline’s total debt fell 2.4% in the second quarter of 2025, reaching 5.8 billion meticais (≈78.5 million USD) — a nominal drop of 144.6 million meticais (≈1.9 million USD) compared to the previous quarter.
Galp Takes Tax Dispute with Mozambique to International Arbitration
In the oil and gas sector, Portuguese energy company Galp formally initiated international arbitration proceedings against the Mozambican tax authorities over capital gains taxation arising from the sale of its stake in Area 4 of the Rovuma Basin in Cabo Delgado, according to Lusa.
“Galp will seek assessment of the Mozambican State’s conduct regarding the capital gains tax dispute linked to the sale of its stake in Area 4. This notice marks the first step toward initiating arbitration proceedings,” the company stated in a filing to Portugal’s Securities Market Commission (CMVM).
The dispute, framed under international investment promotion and protection agreements, has already been notified to President Daniel Chapo. Galp set a deadline for both parties to reach a mutual understanding on the fiscal matter.
At issue is the tax amount due following Galp’s March sale of its Area 4 stake to a subsidiary of Abu Dhabi’s national oil company for 1.05 billion USD (≈66.4 billion meticais).
Mphanda Nkuwa Hydropower Concession Approved
The government approved a decree granting construction and operation rights for the Mphanda Nkuwa hydropower project to the consortium responsible for its design, development, and management.
The decision was announced at the Council of Ministers meeting by government spokesperson Inocêncio Impissa, who explained that the concession contract establishes the legal and institutional framework governing the partnership between the Mozambican State and the concessionaire.
“This instrument defines the rights, duties, and responsibilities of each party, ensuring legal security, transparency, and predictability in the implementation and operation of the Mphanda Nkuwa Hydropower Plant,” Impissa said.
The project is scheduled to begin operations in 2031, featuring a 1,500-megawatt (MW) hydropower facility. It will also include the construction of a 1,350–1,400 km high-voltage transmission line, linking Tete Province (central Mozambique) to Maputo (south).
Text: Florença Nhabinde
