Mozambique Approves $8bn Budget That Slashes Spending
Mozambique cut spending by 9% in its 2025 budget plan compared with a year earlier after post-election unrest dented growth and revenues.The council of ministers approved a 512.75 billion meticais ($8 billion) spending plan for this year, the government said in a statement Tuesday. That compares with 567.86 billion meticais in the 2024 budget. The plan will be presented to legislators, who will need to approve it and pass it into law.
Revenue is foreseen at 385.87 billion meticais and the fiscal deficit at 126.8 billion meticais, or about 8.2% of gross domestic product, the state-owned Notícias newspaper reported on Wednesday, citing Inocêncio Impissa, spokesman for the council of ministers. The economy is forecast to grow 2.9%, it said.
Mozambique faces a financing crunch as soaring debt-servicing costs and a runaway wage bill leave little money for other government programs. The worst election-related protests the country has yet seen — after opposition presidential candidate Venâncio Mondlane disputed the October election outcome that placed him second — have hit growth and revenues, exacerbating the situation.
The gas-rich nation agreed with the International Monetary Fund to cut short its financed economic program this month with about $120 million in lending yet to be disbursed, and negotiate a new one instead. It’s unclear how long it might take to access fresh funds.
S&P Global Ratings in March downgraded its assessment of Mozambique’s local currency debt to “selective default” after the nation carried out a debt swap the company deemed to be distressed, a view that rival Moody’s Ratings shared.
