Africa-Press – Mozambique. Economic activity in Mozambique fell by 0.85% in the third quarter, year on year, marking a full year of consecutive declines, according to data released on Monday by the central bank.
“The decline in economic activity in the third quarter of 2025, measured by the annual change in Gross Domestic Product (GDP), continues to reflect the effects of post-electoral tensions on the economy, particularly in the secondary and tertiary sectors. From the expenditure perspective, the contraction in GDP is mainly driven by the reduction in private investment and consumption,” states a note from the Bank of Mozambique, citing data from the National Institute of Statistics.
The Mozambican economy had already registered a contraction of 5.68% in the fourth quarter of 2024, a period of intense contestation of the general elections held on 9 October, followed by further declines of 3.92% and 0.94% respectively in the first and second quarters of this year.
The Mozambican Government admits a “substantially more adverse” financial scenario compared to that forecast in the proposed Economic and Social Plan and State Budget (PESOE) for 2026, cutting growth projections to 1.6% this year, as well as the expected revenues for 2026.
“In the context of strengthening budgetary transparency and sustainability of public finances, it was necessary to adjust the macro-fiscal estimates to an economic and financial context substantially more adverse than that which underpinned the initial formulation of the PESOE 2026 already submitted,” the note says.
In the document, which revises the proposal submitted to Parliament in October, the Government states that “from the work carried out, it was found necessary to make a downward adjustment of State revenue” by a total amount of 14.9 billion meticais (US$200.6 million / €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 most recent developments in the national macroeconomic context, particularly regarding the revision of economic growth projections, the dynamics of tax revenue collection and the adjustment of the main budget variables,” it reads.
The projection for State revenue is now 406.9694 billion meticais (US$5.48 billion / €5.48 billion) in 2026, equivalent to 24.9% of GDP; State expenditure is set at 520.6342 billion meticais (US$7.01 billion / €7.01 billion), 31.8% of GDP; while the budget deficit remains at 113.6649 billion meticais (US$1.53 billion / €1.53 billion), equivalent to 7.0% of the product.
“Economic growth is projected to recover to 2.8% in 2026, compared to the forecast of 1.6% for 2025, supported mainly by the expansion of the services sector, growth in exports of Liquefied Natural Gas (LNG), as well as by the dynamism of the agricultural sector and significant investments in the energy sector,” adds the Government in the budget proposal.
On 25 November, following approval of this revision, the Government announced it will cut spending on non-priority investment projects in the 2026 State Budget.
In the 2025 PESOE law – approved only in May due to the general elections of October 2024 – the Government had forecast economic growth of 2.9% this year (1.9% in 2024).
The 2026 budget proposal forecasts goods exports valued at US$8.44 billion (€7.27 billion) and Gross International Reserves of US$3.23 billion (€2.79 billion), equivalent to 4.4 months of coverage of imports of goods and services, excluding megaprojects.
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