Mozambique Facing Fiscal Pressure: Will IMF Delay Disbursement of Loan Disbursement?

(3 Minutes Read)

This could result in the IMF postponing or halting disbursements under Mozambique’s ongoing program expiring in March 2025, with about USD 126 million remaining under the final two reviews.

 Mozambique’s fiscal position remains weak as spending pressures continue to mount. Ongoing revenue shortfalls, higher security spending, and weaker growth tied to the post-election protests are adding to fiscal pressures. In addition, multi-year overruns on the public sector wage bill, which consumes around 70% of tax revenue, reduce expenditure flexibility. In our view, a contentious socioeconomic backdrop will weigh on the government’s efforts to consolidate its fiscal position.

This could result in the IMF postponing or halting disbursements under Mozambique’s ongoing program expiring in March 2025, with about USD 126 million remaining under the final two reviews.

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Any positive action on Mozambique’s local currency rating will hinge on the sovereign consolidating its fiscal position, building its cash buffers, and demonstrating access to alternative funding options. Under this scenario, the government would reduce its reliance on local currency debt liability management exercises to manage its upcoming domestic redemptions.