Mozambique's economic week was defined by four major developments: an upward revision of the Bank of Mozambique's (BdM) growth projections for 2027, a reduction in bilateral debt owed to Portugal, China and Japan, Cabinet approval of amendments to key tax regulations, and a clarification by the Mozambican Banks Association (AMB) on the procedures governing the blocking of suspected accounts.

BdM Projects 5.9% Growth in 2027 but Warns of 8.52% Inflation

The Bank of Mozambique (BdM) expects economic growth to accelerate to 5.9% in 2027, up from the 4.4% projected for 2026, while also forecasting end-year inflation of 8.52%, according to Lusa. In its Economic Outlook and Inflation Prospects Report for September, the central bank points to a gradual recovery of the economy, underpinned by dynamism in the primary and tertiary sectors and by increased activity linked to large natural gas projects.

In the second quarter of 2026, gross domestic product (GDP) grew 4.7% year-on-year, driven primarily by agriculture and the extractive industry, with transport, communications and trade also contributing to expansion. Despite this favourable backdrop, annual inflation slowed to 7.95% in August, down from 8.46% in July, though expectations point to an acceleration in the coming months. The BdM forecasts inflation of 8.52% in December, citing rising international prices, the fading effects of the cool season and external factors, with a renewed deceleration expected over the medium term, supported by monetary policy and exchange rate stability.

Mozambique Cuts Debt to Portugal, China and Japan by €31.8 Million

Mozambique reduced its debt to Portugal, China and Japan — its three largest bilateral creditors — by €31.8 million in the second quarter of 2026, with Portugal recording the sharpest decline of €18.6 million between March and June. According to data from the Public Debt Bulletin for the Second Quarter, combined debt to the three countries fell from approximately €1.8 billion at end-March to €1.76 billion at end-June. Credit owed to Portugal declined from €347.1 million to €328.5 million, a drop of 5.4%; debt to China fell from €1.1 billion to €1.0 billion; and debt to Japan decreased from €343.6 million to €338 million.

China remains the largest bilateral creditor, accounting for approximately 14.5% of Mozambique's total external debt and exceeding the combined debt owed to Portugal and Japan, which stood at €666.5 million at end-June. Together, the three countries represented roughly 23.3% of total external debt, whose overall balance fell from €7.63 billion to €7.57 billion — a reduction of €57.3 million that the Ministry of Finance attributed to the 'repayment of certain credits that matured during the period.' Meanwhile, the BdM's Monetary Policy Committee warned of persistent delays in public debt payments, a situation that has weighed on the financial market. Total public and publicly guaranteed debt rose to €15.2 billion, equivalent to 75.9% of GDP.

Government Targets Tax Revenue of 26.2% of GDP by 2035

The government intends to raise tax revenue from the current 17% to 26.2% of GDP by 2035, through broadening the tax base, strengthening tax collection and modernising the fiscal administration, at a time when public sector wages and debt servicing absorb approximately 90% of state revenues, leaving limited resources for public investment. The objective is set out in the Public Finance Management Strategy (EGFP) 2026–2035, approved by the Cabinet, which establishes measures to boost domestic revenue mobilisation, improve public debt management and reduce dependence on external financing.

In parallel, the Council of Ministers approved amendments to the regulations governing Corporate Income Tax (IRPC), Value Added Tax (IVA) and Personal Income Tax (IRPS), aimed at clarifying fiscal procedures and obligations, harmonising the application of legislation and enhancing predictability in the relationship between the tax authority and taxpayers. The Cabinet also approved a new Simplified Tax Regulation for Small Taxpayers (ISPC), revoking the previous regime dating from 2009. To raise domestic revenues, the government plans to gradually integrate informal economic activities into the tax system, tax digital activities and review existing tax benefits and incentives. It has set a target of increasing the share of taxpayers using the Tax Authority's digital services from 30% to 85%, while also envisaging the gradual introduction of green taxation mechanisms and a reduction of the public debt present-value ratio from 76% to 40% of GDP by 2035.

Banks Explain Procedures for Blocking Suspected Accounts

The Mozambican Banks Association (AMB) clarified on Thursday (8) that banking institutions may block accounts and freeze balances when they identify operations suspected of fraud or money laundering, but stressed that such measures are preventive in nature, with competent authorities responsible for determining subsequent steps. The clarification was delivered in Maputo by Samir Zacarias, a representative of the association, during a meeting that brought together regulators, commercial banks and civil society organisations to discuss banking procedures and the challenges facing access to financial services. Zacarias stated that 'bank blocks are administrative and preventive' and that financial institutions are required to report suspected situations to the relevant authorities.

According to the representative, when a bank identifies an operation potentially linked to illicit activities, it must notify the Mozambique Financial Intelligence Unit (GIFiM), the Public Prosecutor's Office and the Bank of Mozambique, in accordance with applicable legislation. He underlined that banks do not have the authority to determine the duration of restrictions related to suspected crimes, as that responsibility lies with the judicial authorities. The AMB's statement follows the Bank of Mozambique's publication, on 29 September, of a notice outlining the circumstances under which credit institutions may block accounts or freeze balances, against a backdrop in which civil society organisations have reported difficulties in accessing banking services. Domingos Manuel do Rosário, programme manager at the Civil Society Learning and Capacity Building Centre (CESC), argued that banks should adopt risk assessment mechanisms tailored to the specific reality of each organisation.

Source: Diário Económico
Original article: https://www.diarioeconomico.co.mz/?p=551077