Maputo, Dec. 1, 2025 (Lusa) - Mozambique's government has acknowledged that the financial scenario is "substantially more adverse" than predicted in the 2026 budget proposal, cutting growth forecasts to 1.6% this year and expected revenues for next year.
"In the context of strengthening budgetary transparency and the sustainability of public finances, it has proved necessary to adjust macro-fiscal estimates to an economic and financial context that is substantially more adverse than that which underpinned the initial formulation of the PESOE [Economic and Social Plan and State Budget] 2026 already submitted," the new proposal states.
In the document, to which Lusa had access on Monday, reviewing the proposal submitted to parliament in October, the government states that "the work carried out revealed the need to make a downward adjustment to State revenue" in the total amount of 14.9 billion meticais (€200.6 million), "which in turn dictated the corresponding alignment in terms of public expenditure".
"The revision of the PESOE 2026 Proposal is based on the need to incorporate the latest developments in the national macroeconomic context, particularly about the revision of economic growth projections, the dynamics of tax revenue collection and the adjustment of the main budgetary variables," it reads.
The projection for state revenue is now 406,969.4 million meticais (€5.481 billion) in 2026, equivalent to 24.9% of Gross Domestic Product [GDP], while state expenditure is now 520,634.2 million meticais (€7.012 billion), corresponding to 31.8% of GDP, while the budget deficit remains at 113,664.9 million meticais (€1.53 billion), equivalent to 7.0% of GDP.
"Economic growth is projected to recover to 2.8% in 2026, compared to the forecast of 1.6% for 2025, mainly sustained by the expansion of the services sector, the growth of Liquefied Natural Gas (LNG) exports, as well as the dynamism of the agricultural sector and significant investments in the energy sector," adds the Government in the budget proposal, which contrasts with the previous forecast of 2.9% economic growth this year.
The government announced on 25 November, after approval of this revision, that it will cut spending on non-priority investment projects in the State budget for 2026.
Under the PESOE law of 2025, the Government predicted economic growth of 2.9% this year (1.9% in 2024). It now maintains an average annual inflation rate of 7%, exports of goods worth $8.431 billion (€7.379 billion) and gross international reserves of $3.442 billion (€3.045 billion), equivalent to 4.7 months of coverage of imports of goods and services, excluding megaprojects.
The proposed revision of the budget document indicates that in 2025 the economy recorded a 3.9% decline in the first quarter and an average contraction of 2.4% in the first half of the year, leading to a downward revision of economic growth by 1.3 percentage points for 2025, with delayed effects in 2026, with an additional reduction of 0.4 percentage points estimated compared to initial projections.
PVJ/ADB // ADB.
Lusa
