British consultancy Oxford Economics has warned that Mozambique may face a gradual devaluation of the metical throughout 2026, in response to a sharp shortage of foreign currency reserves and an overvalued exchange rate that has characterized recent years, according to Lusa.
In a report on Sub-Saharan Africa’s macroeconomic outlook, Oxford Economics includes Mozambique and Angola among four African countries facing the risk of sovereign debt restructuring or financial default. Malawi and Senegal complete the list of vulnerable economies.
According to the analysis, an exchange rate correction in Mozambique could be one of the conditions required as part of ongoing negotiations for a new financing agreement with the International Monetary Fund (IMF). The consultancy expects this new support package to be concluded in the first quarter of the year. At the regional level, analysts warn of a generalized trend of pressure on public debt, stressing that current conditions are undermining investment in essential sectors such as education, health and infrastructure. In Mozambique, the economic growth forecast for 2026 was revised downward from 3.8% to 3.3%, while the estimate for Angola was cut from 3.2% to 2.8%.
The report also notes that despite a slight expected decline in Africa’s public debt—from 62.5% of GDP in 2024 to 62.1% in 2025—levels remain close to those recorded prior to the debt relief initiatives of the mid-2000s. The United Nations Economic Commission for Africa (UNECA) supports this assessment, highlighting that in 2024 debt service costs in Africa reached 163 billion dollars, representing a 12% increase compared to the previous year. In recent months, pressure on foreign currency reserves has intensified, amid high public debt servicing costs, increased import needs and a budget execution increasingly reliant on domestic borrowing.
Recent data from the Bank of Mozambique indicate that net international reserves remain at limited levels, constraining the monetary authority’s ability to intervene in the foreign exchange market, while the State faces growing external obligations, including payments to multilateral and commercial creditors.
This combination has heightened tensions in the foreign exchange market and fueled expectations of a metical adjustment, at a time when the country awaits the conclusion of negotiations with the International Monetary Fund—seen as crucial to restoring donor confidence, easing pressure on foreign currency availability and improving public debt sustainability.
Source: Diário Económico
