The government plans to reduce the share of the state payroll from 12% of Gross Domestic Product (GDP) in 2027 to 10.7% in 2029, while projecting economic growth of 9.5% by the end of the period. These projections are included in the 2027–29 Medium-Term Fiscal Scenario (CFMP).
The document, recently approved by the Council of Ministers, sets out the main macroeconomic and fiscal targets for the next three years. Among its objectives are maintaining macroeconomic stability, ensuring the sustainability of public debt, and gradually creating fiscal space to finance development priorities.
According to official projections, the economy is expected to grow by 1.6% in 2027, 3.7% in 2028, and 9.5% in 2029. Excluding the gas sector, growth will be more moderate, at rates of 1.4%, 2.8%, and 3.7%, respectively. Over the same period, inflation is expected to slow from 8.7% in 2026 to 7% in 2027, 6.5% in 2028, and 5.5% in 2029.
At the same time, the government plans to gradually reduce the public debt-to-GDP ratio from 72.1% in 2026 to 70.5% in 2027, 68.8% in 2028, and 67.1% in 2029. Reducing personnel expenses is presented as one of the main measures to ease pressure on public finances.
To curb the growth of the total payroll, the CFMP plans to limit new hires, strengthen audits and proof-of-life checks, expedite retirement processes, and review allowances and seniority bonuses. Among the measures is a “50% reduction in the percentage of civil and special seniority bonuses,” as well as the continuation of efforts to expedite retirements.
In nominal terms, the government’s operating expenses, which include salaries, are expected to fall from 360.5 billion meticais (4.9 billion euros) in 2027 to 347.4 billion meticais (4.8 billion euros) in 2028. In 2029, spending is expected to increase slightly to 350.9 billion meticais (4.8 billion euros).
Expenditure restraint, combined with increased revenue, is expected to contribute to a reduction in the budget deficit from 4.3% of GDP in 2027 to 2.4% in 2028 and 1.8% in 2029. Total public spending is expected to remain relatively stable, falling from 25.6% of GDP in 2027 to 25.5% in 2029. According to the CFMP, fiscal policy will follow a “path of gradual consolidation,” based on increased domestic revenue, containment of current spending, and improved efficiency in public spending.
The strategy is being adopted against a backdrop of intense pressure on public finances. In 2025, public debt stood at 74.7% of GDP, while the CFMP identifies the wage bill, debt service, and other mandatory expenditures as some of the main sources of this pressure. By reducing debt to 67.1% of GDP by 2029, the government aims to create greater room to finance development priorities without increasing fiscal risks.
Concerns about the burden of the wage bill were also highlighted by the World Bank in a report published in March. The institution considers that Mozambique’s public sector “is not oversized,” despite employing approximately 357,000 workers, but warns of a “sharp increase” in the wage bill following the 2022 wage reform.
According to the Mozambique Economic Update, titled “From Fragility to Stability—Why Fiscal Reforms Cannot Wait,” the increase in the wage bill resulted primarily from higher wages rather than growth in the number of civil servants.
The World Bank also estimates that the share of the public sector payroll in GDP has risen from less than 5% in 2000 to 15% in 2023. The data highlight the scale of the challenge the government intends to address through the measures outlined in the CFMP 2027–29.
Source: Lusa
