Mozambique metical faces 30% devaluation risk amid IMF talks

Mozambique is facing significant economic pressure, with Oxford Economics forecasting a potential 30% devaluation of the metical by early 2027. This projection stems from severe pressures on public finances and monetary stability. The forecast follows Moody's decision to downgrade Mozambique's credit rating to Caa3, placing its sovereign debt just one notch above default.

In response to foreign currency shortages and financial difficulties, the Mozambican government has resumed discussions with the International Monetary Fund (IMF) regarding a new support programme. Following a ten-day working mission, the Ministry of Finance stated that discussions have initiated for a potential Credit Facility Programme. Analysts warn that a major devaluation would immediately increase import costs and erode household purchasing power.