Mozambique needs fiscal consolidation as financing problems mount

Mozambique needs to implement ambitious fiscal consolidation measures to mitigate worsening debt dynamics, delays in debt servicing and limited external financing that weigh on the economy, the International Monetary Fund warned on Tuesday.



The fiscal deficit is projected to have narrowed to 4.5% of GDP last year from 6.2% in 2024 due to lower spending on goods and services and capital projects, but rising interest payments threaten to widen deficits in the coming years.



In a report after its annual review of the southern African nation, the Fund also said that domestic banks, the primary buyers of government debt, had reached their limits, while net external financing had turned negative.