Oxford Economics is forecasting an approximately 30% devaluation of the Mozambican metical in early 2027, in a scenario the consultancy describes as shaped by severe pressures on public finances and monetary stability.
The analysis follows Moody's recent downgrade of Mozambique's sovereign debt to just one notch above default.
"We are very pessimistic about the macroeconomic outlook for Mozambique, especially with regard to public finances and monetary stability," analysts from the British consultancy's Africa division wrote.
According to Oxford Economics, the foreign currency shortages and financial difficulties that triggered the recent decisions by ratings agencies have prompted the government to pursue negotiations for a new support programme with the International Monetary Fund (IMF).
The analysts argue that a financial adjustment agreement currently under negotiation with the IMF could entail a devaluation of around 30% of the metical at the start of the first quarter of 2027.
The consultancy warns that a devaluation of that magnitude would have immediate effects on the economy, notably through higher import prices in local currency terms and a reduction in household purchasing power.
"A devaluation of the Mozambican currency will immediately raise the local-currency price of all imports, weaken local purchasing power, and exert additional price pressure on households," the analysts cautioned.
The Oxford Economics assessment comes after Moody's last week downgraded Mozambique's credit rating to Caa3, signalling an increased risk of financial default.
The ratings agency justified the decision by pointing to the extension of payment difficulties and domestic debt arrears into external debt obligations, including the risk of a potential restructuring of foreign-currency debt held by the private sector.
"The downgrade reflects the increased risk that the government will restructure its foreign-currency debt to the private sector, including the Eurobond," Moody's stated.
According to agency data, domestic payment arrears had risen to US$328 million by end-2025, equivalent to approximately 1.3% of Mozambique's gross domestic product (GDP).
The Moody's decision follows Fitch's reduction of Mozambique's rating to CC in April, with the agency warning of the possibility of a debt restructuring.
The Caa3 rating indicates an expectation of high credit risk and, according to Moody's, a potential restructuring of foreign-currency debt could result in losses of between 20% and 35% for private investors.
Oxford Economics also highlights that wages and interest payments currently absorb approximately 80% of government revenues, while Eurobond principal repayments are not due to begin until 2028.
"But the debt profile gives every reason to expect the state will need to restructure its debt, which Moody's defines as a default," the analysts wrote.
S&P has maintained Mozambique's sovereign debt rating at CCC+ with a negative outlook since March, completing a picture of unfavourable assessments from all three major international credit rating agencies.
Source: Diário Económico
Original article: https://www.diarioeconomico.co.mz/2026/09/23/economia/financas/oxford-economics-preve-desvalorizacao-de-30-do-metical-em-2027/
