Maputo, 13 Nov (AIM) – The International Monetary Fund (IMF) has warned that the rising international fuel prices, foreign currency shortages and difficulties in managing public finances are increasing the vulnerabilities of Mozambique’s economy.
According to Olamide Harrisson, IMF’s Resident Representative in Mozambique, speaking on Wednesday during the presentation of the economic outlook for sub-Saharan Africa, Mozambique’s economy may also run risks in the current account balance and foreign exchange reserves, reducing the government’s ability to respond to external shocks.
“The higher import bill could put further pressure on Mozambique’s external position, deplete foreign exchange reserves and limit the authorities’ ability to respond to additional shocks. Fuel prices are exacerbating foreign currency shortages and budgetary pressures, with both the current account balance and foreign exchange reserves expected to deteriorate”, he said.
According to Harrisson, when the State does not have sufficient financing to cover the fuel prices, the burden falls on the public budget, importers or public utility companies, creating risks for the functioning of the market.
“Keeping prices down can provide temporary relief for consumers, but it does not eliminate the additional cost of imports. If the difference is not financed, it becomes a source of pressure on public expenditure or an obligation for sector operators, with consequences for supply”, he explained.
Harrisson also explained that this scenario places Mozambique among the 20 sub-Saharan African economies whose terms of trade are expected to deteriorate in 2026. For this group, the IMF projects a slowdown in economic growth from five percent in 2025 to 4.6 percent in 2026. By contrast, in the 22 economies with prospects for improved terms of trade, growth is expected to accelerate from 4.3 percent to 4.5 percent over the same period.
The deterioration in the terms of trade means that Mozambique is paying more for its imports relative to the value of its exports. For a country heavily dependent on imported fuel, rising international prices mean a higher import bill, increasing demand for foreign currency and putting further pressure on production costs and public finances.
The IMF also points out the risks of disruptions in the energy sector, climate shocks and additional financing needs associated with insecurity and humanitarian assistance. These factors could increase government expenditure and financing requirements in an environment of limited resources.
Am/
