The Government has presented a revision of the Economic and Social Plan and State Budget (PESOE) for 2026, justifying the need to reassess macro-fiscal projections in view of an economic context substantially more adverse than the one that supported the initial proposal submitted to the Assembly of the Republic in October.
According to Lusa, the new version, released this Monday (1), points to a significant reduction in projected revenues and a proportional adjustment in public spending, while maintaining the previously projected budget deficit.
The document states that a cut of 14.9 billion meticais (233.2 million dollars) was necessary in the State revenue projection for 2026, revising the total to 406.9 billion meticais (6.4 billion dollars), equivalent to 24.9% of the Gross Domestic Product. In parallel, public expenditure is now set at 520.6 billion meticais (8.1 billion dollars), representing 31.8% of GDP. The deficit remains fixed at 113.6 billion meticais (1.8 billion dollars), corresponding to 7% of GDP.
The revision incorporates the most recent developments in the economic environment, marked by a strong slowdown in activity during the first half of 2025. The Government acknowledges that the economy contracted by 3.9% in the first quarter and registered an average decline of 2.4% in the semester, forcing a downward revision of growth for this year from the initial forecast of 2.9% to 1.6%. This slowdown will have repercussions on 2026, reducing initial growth projections by 0.4 percentage points. Even so, the revised proposal maintains expectations of a moderate recovery, with economic growth estimated at 2.8% in 2026, supported mainly by the dynamism of the services sector, the resumption of Liquefied Natural Gas exports, the performance of the agricultural sector, and investments in the energy sector.
Key macroeconomic assumptions, such as an average inflation rate of 7%, remain unchanged. Goods exports for 2025 are still estimated at 535.5 billion meticais (8.4 billion dollars), while Gross International Reserves stand at 220.1 billion meticais (3.4 billion dollars), equivalent to 4.7 months of import coverage for goods and services, excluding megaprojects.
Following approval of the budget revision, the Government reiterated that it will reduce spending on investment projects deemed non-priority in order to strengthen the sustainability of public finances amid international volatility and declines in domestic economic activity.
Source: Diário Económico
