By 2029, the government forecasts average annual economic growth of 4.6% of Gross Domestic Product (GDP) and a reduction in the public debt stock from 75% of GDP to 61%, according to a report consulted this Tuesday, 25 March, by Lusa.
According to the body, the macroeconomic stability targets are included in the Government’s Five-Year Programme (PQG) 2025-2029, the first of the Executive led by President Daniel Chapo, who took office last January, and which will be discussed during the first parliamentary session of this legislature, which starts on Wednesday (26) in Maputo.
The programme sets a target for state revenues to rise from 24.6% of GDP in 2024 to 25.4% in 2029, cutting state spending from 35.40% to 32.88%. The government forecasts that the public debt stock will rise from the equivalent of 74.20 per cent of GDP in 2024 to 60.80 per cent in 2029, based on average annual economic growth of 4.6 per cent, including Liquefied Natural Gas (LNG) projects, compared to 1.9 per cent last year.
Among the first macroeconomic goals of the Executive of Daniel Chapo, of the Front for the Liberation of Mozambique (Frelimo, in power since 1975), is also the reduction of the country’s trade deficit, from 34.46 per cent in 2024 to 13.19 per cent in 2029.
At the beginning of March, the International Monetary Fund (IMF) argued that the country needs a ‘fiscal consolidation’ in 2025 to guarantee the sustainability of public accounts, given the significant fiscal slippage seen in the previous year.
‘Preliminary estimates suggest that there were significant fiscal slippages in 2024, which are partly explained by the slowdown in economic activity during the last quarter,’ said Pablo Lopez Murphy, quoted in an IMF statement on the evaluation of the Extended Credit Facility (ECF) agreement.
‘Fiscal consolidation in 2025 is necessary to ensure fiscal and debt sustainability and preserve macroeconomic stability,’ added Murphy, who led the IMF team and discussions with national authorities, including the Mozambican President and the Prime Minister, from 19 February to 4 March, alluding to the policies that underpin the fifth and sixth reviews under the ECF.
It also stressed that ‘slippages in payroll spending continue to crowd out important spending priorities, including social transfers and infrastructure’, advocating the ‘rationalisation of payroll spending and the reduction of tax exemptions’.
The IMF also pointed out that economic activity in the country ‘contracted sharply in the last quarter of 2024, reflecting the impact of social unrest’ in the context of the country’s post-election protests, leading to a 4.9 per cent drop in Gross Domestic Product (GDP) in the fourth quarter, putting overall growth last year at 1.9 per cent.
‘By 2025, growth should recover to 3.0% as social conditions normalise and economic activity picks up, especially in services,’ says the IMF forecast.
