Mozambique

Investments in natural gas, the pillars of growth in 2027

Following a modest recovery in 2026 that was hampered by devastating floods early in the year, the mining industry’s underperformance and soaring oil prices, growth is expected to accelerate in 2027 and should continue to be largely driven by massive investments in the liquefied natural gas (LNG) sector. Eni’s Coral Norte FLNG megaproject (USD 7.2 billion), TotalEnergies’ Mozambique LNG (USD 20.5 billion), and ExxonMobil’s Rovuma LNG (USD 30 billion) for which the final investment decision is imminent will boost the country’s capital expenditures through 2028–2031 and the duration of their respective construction phases. Located in the northern province of Cabo Delgado, their development has been delayed by terrorist threat, which is now under control. Source of thousands of domestic jobs, these gas infrastructure projects are driving growth in private consumption as the impact of the 2024–2025 uprisings continues to fade gradually. The trend is likely to intensify if the inflationary pressures associated with energy and the war in Iran ease, which could prompt the Banco de Moçambique to resume its cycle of monetary easing despite the chronic foreign exchange deficit that implicitly pegs the metical to the dollar.

Conversely, net exports are expected to remain the main drag on growth in 2027. Imports of machine tools, construction equipment and specialised services for gas project development will rise sharply, while export prospects remain limited in the short term. The decline in coal exports (21% of total exports in 2025) and the uncertainty surrounding Mozal Aluminium, the country’s main aluminium smelter (20%) which was shut down in March 2026 for an indefinite period due to power supply difficulties, are not expected to be offset by the expansion of the LNG sector for several years. More broadly, non-extractive sectors are expected to post more modest growth, illustrating Mozambique’s lack of economic diversification, with 82% of the population still living below the international poverty line.

Growing financing needs while awaiting natural gas dividends

Despite the government’s commitment to contain the public sector’s payroll (49% of public spending, or 14% of GDP in 2025), the budget deficit is expected to widen even further in 2027, while debt service costs are set to increase significantly. Consequently, since the suspension in April 2025 of the IMF program under the Extended Credit Facility, Mozambique has increasingly relied on short-term domestic financing, which is more costly and exacerbates refinancing risk. At the same time, government revenues will remain stable, as reforms aimed at broadening the tax base and modernising tax collection have only a marginal impact on fiscal consolidation efforts. Consequently, public debt-to-GDP is expected to continue rising in 2027.

Although external debt, which accounted for 68% of total outstanding debt in 2025, evenly split between multilateral and bilateral lenders, is largely concessional, the overall debt level is considered unsustainable, as illustrated by concerns surrounding the management of the country’s sole Eurobond of USD 900 million maturing in 2031. As a result, Maputo is working to negotiate a new financing program with the IMF, which would make the World Bank’s disbursement of USD 6 billion over the 2026–2031 period contingent on that agreement. The full repayment of approximately USD 700 million in debt to the IMF in March 2026 – several years ahead of schedule – has bolstered Mozambique’s credibility, as the country appears ready to continue rolling out its economic reforms. A favourable decision by the IMF remains contingent on an agreement in principle among creditors on a debt restructuring that will consider the fiscal benefits of megaprojects by 2030, provided there are no further delays. Maputo is also considering converting some or all the USD 1.4 billion in debt owed to China – Mozambique’s largest bilateral creditor – into yuan to reduce repayment costs. This initiative is even more likely to succeed given that Beijing is pursuing a strategy to internationalise the yuan.

The current account is expected to remain in deep deficit in 2027, driven by a worsening trade balance on back of increased imports of goods and services related to the gas megaprojects. Buoyed by gas production from Coral Sul – the counterpart to Coral Norte – and the potential reopening of Mozal Aluminium, exports will only partially offset the import-prompted shortfall. Furthermore, the primary income deficit, which is fuelled by the repatriation of profits by foreign companies, will outweigh remittances from expatriate workers, which have been impacted by the deportation of foreigners from South Africa. As a result, the current account deficit is expected to be largely financed by foreign investment, which will not prevent international reserves from depleting to below the critical threshold of three months’ worth of imports in 2027.

The security challenge is the linchpin of natural gas ambitions

Mozambique’s political landscape continues to be marked by the large-scale protests that followed the October 2024 presidential election – which was marred by irregularities – and resulted in the victory of Daniel Chapo, the candidate of the Mozambique Liberation Front (Frelimo), the party that has been in power since independence. While the unrest has subsided following a bloody crackdown, the underlying causes of the uprising – a deteriorating economic situation, income inequality and the like – persist and continue to fuel discontent. In parliament, the long-standing opposition party, the National Resistance of Mozambique (Renamo), lost seats to a newcomer, the Optimistic Party for the Development of Mozambique (Podemos), whose candidate was the main leader of the protests. The national reconciliation initiatives launched since then have struggled to bear fruit. Rollout of the law passed in April 2025 aiming to limit presidential powers, depoliticise institutions and enhance decentralisation remains slow and uncertain.

The precarious security situation in Cabo Delgado where major gas projects are concentrated (offshore for Coral Norte, onshore for the others) is one of the government’s top priorities. Since 2017, the province has been the site of a jihadist insurgency led by a group affiliated with the Islamic State. The announcement in May 2026 that European financial support for the Rwandan military intervention in Cabo Delgado will not be renewed is not expected to threaten the deployment of troops, as Maputo has announced that it has secured other sources of funding, with Brussels nevertheless planning to continue training Mozambican soldiers. Rwanda’s commitment is even more crucial as foreign companies are just beginning to re-engage in the region after several years’ absence following the declaration of force majeure due to terrorism. Any further interruption would further delay the development of LNG, the main growth driver in the medium term.

Last updated:July 2026