Public spending fell by 3.8 billion meticais ($60 million) in the second quarter of 2025 compared to the same period last year, but wage pressures and public debt costs continue to threaten budgetary stability. The warning comes from the Ministry of Finance, which projects a fiscal deficit exceeding 6% of GDP for 2026.
According to the Fiscal Risk Monitoring Report released by the ministry, “public expenditure has experienced adverse dynamics in recent periods, reflecting structural rigidity and pressures on the State Budget.”
Despite a 4% year-on-year decrease in total expenditure, the government highlights rising pressure in structural areas: wage spending accounted for 52% of quarterly expenditure, while debt servicing absorbed 11%, representing increases of 12% and 25%, respectively, compared to the same quarter of 2024. Weak domestic revenue collection, combined with the reduction of support programs from international partners, continues to exert significant pressure on public finances. “This context poses additional challenges to fiscal sustainability, requiring greater rigor in public finance management, in setting budgetary priorities, and in reinforcing fiscal discipline,” the report states.
For 2026, the government projects public spending at around 32% of GDP, against estimated revenues of 28%, which should result in a deficit of about 6% of GDP. The gap will be financed through grants and domestic and external borrowing, albeit under tighter control.
During the presentation of the Economic and Social Plan and State Budget (PESOE) for 2026, held at the Central Development Observatory in Maputo, the Secretary of State for the Treasury and Budget, Amílcar Tivane, reaffirmed the pillars of fiscal policy: “We will continue to work on rationalizing expenditures, with two cornerstones of this process being the control of the wage bill and the stabilization of debt servicing costs.”
Tivane also acknowledged the constraints imposed by the international context, admitting that external shocks and geopolitical instability are affecting the country’s economic performance. “Ensuring a balance between fiscal consolidation and the need to create room for productive investment is essential to sustain economic growth,” he stated.
Regarding public debt, the government pledged to continue implementing a debt management strategy, through passive management operations, debt swaps, and a possible reduction in borrowing levels, with the aim of improving the country’s risk indicators.
Source: Diário Económico
