IMF Ends Week-Long Mozambique Mission After Discussing New Fund-Backed Programme Request
The International Monetary Fund concluded a week-long mission to Mozambique on Friday, June 12, after discussing the heavily indebted country’s request for a new fund-supported arrangement, the IMF said in a statement. Mission chief Pablo Lopez Murphy described Mozambique as facing a “challenging economic situation,” according to Reuters, as the Fund and Mozambican authorities assessed the steps needed before a new programme can be agreed.
The IMF staff team, led by Lopez Murphy, was in Maputo from June 8 to June 12. The visit was confirmed in a statement from Mozambique’s Ministry of Finance, which said the mission would “focus on a joint assessment of fiscal consolidation measures, identifying ways to reduce macroeconomic imbalances, with a view to a potential Credit Facility Programme.”
The State of the Economy
Mozambique’s economy contracted by an estimated 0.5% in 2025, according to central bank and IMF data — a reversal from the modest growth trajectory that had been projected before a succession of shocks. The Fund estimated public debt at 91% of GDP in February 2026. Debt service arrears have persisted throughout 2025 and, since October, extended to short-term securities for the first time.
The Mozambican metical has come under sustained pressure. The central bank’s loans to the government jumped 176.1% to 49.6 billion meticais, official data showed — a development that reflects the government’s difficulty accessing conventional external financing and raises the risk that monetary financing of the fiscal deficit could entrench inflation pressures.
Mozambique’s public debt problems date to a 2016 hidden-debt scandal in which $1.4 billion in undisclosed state debt — equivalent to more than 10% of GDP — was discovered, wrecking investor confidence and sharply curtailing access to international financing. The country has not fully recovered that access in the decade since.
What the Fund Wants
The IMF’s February 2026 Article IV consultation, approved by the Executive Board on February 13, set out the conditions against which any new programme would be assessed. The Fund called for ambitious fiscal consolidation of around 3 percentage points of GDP, greater exchange rate flexibility to reduce external imbalances, structural reforms to improve governance and foster private-sector-led growth, and decisive action to address debt dynamics — including a reduction in central bank financing of government operations.
Lopez Murphy’s statement at the conclusion of the November 2025 mission had been direct: “A coordinated policy package that includes urgent fiscal consolidation while protecting the vulnerable and poor, greater exchange rate flexibility, and structural reforms to improve governance and foster private sector-led growth would help Mozambique address its challenges.”
The critical policy recommendations from the 2024 Article IV — fiscal consolidation and greater exchange rate flexibility — had not been implemented as of the February 2026 assessment, the IMF noted. Progress toward a new programme will depend on implementation of those reforms, the Fund said.
The World Bank Dimension
The IMF mission overlapped with a visit by senior World Bank leadership to Maputo the same week. On June 9, a signing ceremony at the Office of the Prime Minister concluded five financing agreements worth a combined $450 million across social protection, agriculture, water and sanitation, and education and skills. The agreements form part of a broader $10 billion World Bank partnership framework for Mozambique, with $6 billion earmarked for the public sector and $4 billion for the private sector.
Finance Minister Carla Louveira said the World Bank’s Development Policy Operation — the component that would restore direct budget support — would be activated once Mozambique meets agreed benchmarks on macroeconomic sustainability, debt sustainability, and financial integrity, in coordination with the IMF. “This is a very close coordination we are having with the Bank,” Louveira told reporters, adding that President Daniel Chapo had personally raised the budget support request during a recent visit to Washington.
The parallel tracks reflect a choreography that is standard in IMF-World Bank engagement with heavily indebted low-income countries: the IMF certifies macroeconomic stability and reform credibility, and the World Bank unlocks budget support contingent on that certification.
The Gas Sector: A Structural Wild Card
A critical long-term variable for Mozambique’s fiscal trajectory is the resumption of major liquefied natural gas projects in the country’s northern Cabo Delgado province. The IMF and credit analysts have consistently cited the LNG outlook as the principal source of optimism in an otherwise sober assessment.
The Coral South floating LNG project, operated by Eni, has been producing since October 2022. The larger TotalEnergies-operated Mozambique LNG project — delayed by a jihadist insurgency that began in 2017 — has not yet resumed construction, though the security environment has improved. If the project advances toward production on its current timeline, it would materially improve Mozambique’s export revenues, government receipts, and debt-servicing capacity in the second half of the decade.
The IMF Country Report published in February 2026 described Mozambique as standing “at a critical juncture in its development trajectory,” noting that structural transformation had favoured capital-intensive LNG projects over manufacturing, while agriculture — which employs three-quarters of the population — suffers from low productivity and limited access to inputs and finance. Informality accounts for approximately 95% of jobs. Human development indicators remain among the world’s lowest.
Background
Mozambique’s previous IMF Extended Credit Facility arrangement, approved in May 2022 for approximately $456 million, lapsed in April 2025 with its fifth and sixth reviews still pending. The authorities and IMF staff agreed in April 2025 not to proceed with the remaining reviews and instead initiated discussions on a successor programme. Mozambique was subsequently removed from the Financial Action Task Force’s grey list, improving its standing in international financial regulation. A post-financing assessment to evaluate the lapsed programme is scheduled for August 2026. Under the lapsed arrangement, approximately $343 million had been disbursed in four tranches before the programme ended. The Mozambican government had requested a new programme as early as May 2025. President Chapo has repeatedly stated he expected a new programme to be agreed before the end of 2025, a target that was not met.
What Happens Next
The IMF staff team has concluded its June 8-12 visit without announcing a staff-level agreement, signalling that further policy implementation and reform commitments by Mozambique will be required before any new arrangement can be finalised. A post-financing assessment of the lapsed ECF programme is scheduled for August 2026, which will provide the next formal IMF assessment checkpoint. Finance Minister Louveira has tied the World Bank’s budget support activation to IMF certification of progress on macroeconomic benchmarks, meaning the two processes are sequentially dependent. Whether Mozambique implements the fiscal consolidation measures — particularly the reduction of central bank lending to government and greater exchange rate flexibility — that the IMF has made a precondition for programme discussions to advance will determine the timeline for any new arrangement.
