Most of the fiscal risks previously identified by the Government for 2025 materialized, reflecting a worsening of the fiscal situation compared to the previous year, according to the Fiscal Risk Monitoring Report released this Monday (2).
According to Lusa, the document shows that six out of nine fiscal risks assessed for the 2025 financial year materialized, up from four recorded in 2024, indicating a deterioration in the country’s macroeconomic and budgetary conditions.
Among the risks that materialized are the contraction of economic activity, state revenues performing below projections, wage bill growth exceeding initial estimates, public debt rising above expected levels, as well as pressures related to pension spending and the effects of climate and economic shocks.
The Mozambican economy contracted by 0.52% in 2025, contradicting the initial forecast of 2.9% growth. The performance reflects successive downward revisions throughout the year, in a context marked by internal and external challenges.
State revenues totaled 364.4 billion meticais, falling 21.4 billion meticais short of the target. According to the report, this result was influenced by the slowdown in economic activity and reduced external demand in the extractive sector. Public expenditure, in turn, reached 465.8 billion meticais, below the budget allocation of 520 billion meticais. The Government attributes this execution to limited mobilization of external financing, particularly grants and concessional loans.
Personnel expenditure continued to represent the main pressure on public finances, accounting for around 46% of total expenditure. The report notes that the structural rigidity of this component continues to limit fiscal management flexibility. Regarding public debt, the stock reached 1 trillion meticais in 2025, equivalent to 72.2% of Gross Domestic Product (GDP), exceeding the initial projection of 60.5%. The increase was driven mainly by domestic debt, which expanded by 16.6%.
The document warns that this trajectory could have implications for the functioning of the government securities market, stressing that debt sustainability largely depends on the country’s ability to ensure strong and sustainable economic growth.
Among the identified risk factors are also extreme weather events. During the 2024–25 rainy season, three cyclones affected different regions of the country, causing damage estimated at 11 billion meticais, in addition to human losses and significant infrastructure destruction. According to the report, heavy rainfall, lightning strikes and floods led to the partial or total destruction of about 414,000 homes and flooded 12,853 residences. In the social sector, 207 hospitals, 1,822 schools and 5,969 classrooms were also affected.
Among the risks that did not materialize in 2025 is inflation, which stood at 4.37%, below the initial forecast of 7.0%. Total state expenditure also remained below the budget allocation, contradicting the initially projected risk scenarios.
