IMF Staff Country Reports

This paper highlights Republic of Mozambique’s 2024 Article IV Consultation, Fourth Review under the Three-Year Arrangement under the Extended Credit Facility, Requests for Modifications of Quantitative Performance Criteria (QPC), Waiver of Nonobservance of Quantitative Performance Criteria, and Financing Assurances Review. Economic growth is positive but expected to moderate, with tight financial conditions acting as a drag on activity. While inflation pressures have declined, Mozambique faces significant risks, mainly from adverse climate events and the fragile security situation. The authorities’ efforts to ensure fiscal discipline are welcome. Further fiscal consolidation is needed, given Mozambique’s high debt and tight financing conditions. A tight monetary policy stance has helped to contain inflationary pressures and rebuild foreign exchange reserves. With the weak outlook for nonmining growth, well-anchored inflation expectations, and continued fiscal consolidation, a gradual easing of the monetary policy stance is appropriate. Continued capacity development, including in the operation of the Sovereign Wealth Fund, remains essential for strengthening institutional capacity and allowing Mozambique to achieve its development objectives. Measures to build resilience to climate change and accelerate progress on addressing gender-based disparities are also crucial.