Mozambique projects GDP growth driven by gas projects amid fiscal risks

Mozambique’s Ministry of Finance projects significant economic growth by 2029, driven primarily by large-scale natural gas projects in Cabo Delgado. According to the 2027 Fiscal Risk Report, the nominal GDP is expected to reach 2.1 trillion meticais in 2029, following a projected growth rate of 9.5% that year. This follows a period of slower expansion, with growth estimated at 0.6% in 2026 and 1.54% in 2027.

However, the report highlights severe fiscal challenges. By 2027, public sector salaries and debt servicing are projected to consume approximately 96% of the state's tax revenue, leaving only four meticais for every 100 collected to fund other essential services, such as health and education.

Inflation is expected to decrease gradually from 8.7% this year to 5.5% by 2029. While tax revenues are forecasted to rise steadily, reaching 397 billion meticais by 2029, the government faces risks from climate events like droughts and cyclones, which could impact state accounts by an estimated 18.45 billion meticais in 2027.