IMF Discusses Mozambique Request for Fund-Backed Programme
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The International Monetary Fund said on Friday it discussed Mozambique's request for a fund-supported arrangement, as it concluded a week-long mission to the heavily indebted African country. Mozambique is facing a "challenging economic situation," Pablo Lopez Murphy, who led the IMF team that visited Maputo from June 8 to 12, said in a statement.
"Economic activity is gradually recovering from a contraction in 2025, but growth remains subdued," he said. The IMF staff team told Reuters that its objective was to review recent economic developments, discuss the authorities' plans to restore fiscal and debt sustainability, and explore how the Fund can best support Mozambique going forward.
The IMF reclassified the Southern African country's debt as unsustainable in February, citing a deterioration in public finances. The country's debt problems date back to a 2016 hidden-debt scandal, which wrecked investor confidence and curbed access to funding.
The hidden-debt scandal involved undisclosed loans of approximately $2 billion that were taken out by state-backed companies without proper government authorization. This revelation triggered a major crisis in Mozambique's financial system and led to a significant downgrade in the country's credit rating by international ratings agencies.
The economic contraction in 2025 was partly driven by the ongoing effects of the debt crisis, which limited the government's ability to invest in public infrastructure and social programs. Additionally, natural disasters including cyclones have further strained the country's economic resources and damaged critical infrastructure.
Mozambique's authorities have been working to implement fiscal reforms aimed at reducing the budget deficit and improving tax collection. These measures include efforts to strengthen public financial management and enhance transparency in government spending.
The Fund-supported arrangement would provide Mozambique with financial assistance and technical expertise to help the country navigate its economic challenges. Such programmes typically include policy conditions designed to promote sustainable economic growth and restore macroeconomic stability.
International investors are closely watching the IMF's engagement with Mozambique as a signal of the country's commitment to addressing its debt problems. Successful completion of an IMF programme could help restore confidence and improve Mozambique's access to international capital markets.
The mission represents an important step in Mozambique's efforts to stabilize its economy and work toward long-term sustainable growth. The outcome of the discussions will be crucial for determining the country's path forward in addressing its fiscal and debt sustainability challenges.
