Mozambique: An Overview

The Mozambican Economy

The IMF revised its forecast for Mozambique’s economic growth in 2026 to 3.5%, which is above the 3.2% target set in the country’s State Budget. The African Development Bank Group projects that real GDP will grow by an average of 3.5% for 2026, driven by the extractives sector, particularly gas production. Growth will be supported by extractives and agriculture on the supply side and by private consumption and foreign direct investments on the demand side. GDP per capita is expected to grow 3.5% in 2026.

Inflation is expected to average 3.7% to 4% during 2026, pushed mostly by domestic demand during an economic recovery, according to the latest report on the country by the Economist Intelligence Unit (EIU).

According to the Mozambique government, the 2026 budget proposal anticipates economic growth of 3.2%, supported by a nominal GDP estimated at MZN1.6 trillion (USD24.2 billion), an improvement compared to the 2.9% growth projected for 2025 and the 2.2% growth recorded in 2024. The slowdown in recent years has been attributed, among other factors, to post-election unrest and an adverse economic environment.

The fiscal deficit is projected to be 6.9% of GDP in 2026, the lowest in four years.

According to the Mozambique government, the Economic and Social Plan and State Budget (PESOE) for 2026 aims to set annual macroeconomic targets, with a planned budget and expenditure level of around 32% of GDP, government revenues around 28% of GDP, and a fiscal deficit of around 6% of GDP.

Regarding prices, the government estimates annual inflation at 3.7% in 2026, lower than the 7% expected for 2025 and the 7.1% recorded in 2023. For net international reserves, the government expects coverage of 4.4 months of imports, below the 4.7 months forecast for 2025 and the five months recorded in 2024.

In any case, the IMF’s figures, which usually serve as a barometer for the financial world, point to a 3.5% GDP growth in 2026.

According to World Bank Mozambique’s Economic Update notes, growth is expected to accelerate in the medium term, averaging 4.2% in 2026.

In May 2025, Mozambique and the IMF team reached a staff-level agreement on the economic and financial policies for the fourth review under the Extended Credit Facility (ECF) Arrangement, which was to provide Mozambique with about USD45.44 million.

Mozambique’s natural gas exports generated MZN35.4 billion (USD567.7 million) in the first quarter of 2025, a year-on-year increase of 28%, overtaking coal as the country’s top export for the first time in history. The data was published in the Balance of Payments report by the Bank of Mozambique.

According to the document, revenue growth was driven by higher export volumes from Coral Sul FLNG, the floating liquefied natural gas platform operating in Area 4 of the Rovuma Basin, currently the only operational infrastructure in the region. The trend was further reinforced by a 12.8% rise in the average international price of natural gas.

Total goods exports in the period amounted to MZN115.7 billion (USD1.9 billion), of which large projects (GPs) accounted for MZN91.2 billion (USD1.5 billion). Key GP exports included gas, aluminum, coal, electricity and heavy sands.

Coal, which until recently dominated Mozambique’s export portfolio, saw revenues fall to MZN18.7 billion (USD300.8 million), down 35% compared to the first quarter of 2024. The decline was linked to the shutdown of several mines, rail line disruptions caused by extreme weather in central Mozambique, a 6% drop in average prices, and road blockages resulting from post-election protests.

Aluminium also surpassed coal, reaching MZN23.7 billion (USD380.7 million), driven by a 45% increase in export volume and a 14% rise in average price. The manufacturing industry, led by aluminium bar production, posted a total growth of 73%, with exports valued at MZN27.5 billion (USD444 million). In contrast, Mozambique’s traditional export products contracted, totalling just MZN6.6 billion meticais (USD105 million), down 29% from the same period in 2024, with agriculture particularly affected.

Meanwhile, the state collected MZN13.1 billion (USD210 million) from oil and natural gas exploitation by June. Of this, MZN10.3 billion (USD164.7 million) corresponded to 2024 revenues, while MZN2.8 billion (USD45.2 million) came from the first half of 2025. All proceeds were channelled into the Transitional Account of the Mozambique Sovereign Wealth Fund, in line with Law No 1/2024.

Mozambique’s natural gas reserves, according to studies, have the potential to generate up to MZN6.2 trillion (USD100 billion) in revenues. Even before the new projects come online, estimated production for 2026 stands at 5.4 billion cubic meters, placing Mozambique as the sixth-largest gas producer on the African continent.

In October 2025, Eni and its partners CNPC, ENH, Kogas and XRG reached the Final Investment Decision (FID) to develop the Coral North FLNG project in deepwater offshore Cabo Delgado, north of Mozambique. The USD7.2 billion project will put in production the gas volumes from the northern part of Area 4’s Coral gas reservoir in the Rovuma basin, through a state-of-the-art floating LNG facility. The project will be implemented by the joint venture formed by Eni (50%), CNPC (20%), Kogas (10%), ENH (10%) and ADNOC’s subsidiary XRG (10%).

Coral North is Eni’s second development in Mozambique and the second large-scale FLNG delivered in ultra-deep waters worldwide, with Coral South being the first.

With an estimated production liquefaction capacity of 3.6MTPA, Coral North FLNG – coupled with its predecessor Coral South – will bring Mozambique’s overall LNG production to exceeding 7MTPA, making the country the third-largest LNG producer in Africa and further reinforcing its role in the global energy scenario.

Meanwhile, TotalEnergies lifted the force majeure on its Mozambique LNG project in October 2025 after years of suspension due to insurgent attacks, and the Mozambican government has agreed to reinstate the four-and-a-half-year suspension period during which the LNG megaproject in Cabo Delgado was under force majeure.

Foreign Investment in Mozambique

The government of Mozambique encourages foreign investment, and the country offers significant investment opportunities in various sectors, such as agriculture, fishing and aquaculture, extractive industries, tourism, public infrastructure, natural resources and energy. Investment, including foreign investment, is subject to specific legislation.

The Mozambique government estimates that foreign direct investment (FDI) doubled compared to 2024, reaching MZN101.5 billion (USD1.6 billion).

Of this total, MZN95.8 billion (USD1.5 billion) was directed toward large projects, with MZN80.1 billion (USD1.2 billion) going into the extractive sector; primarily infrastructure development for natural gas production.

In the PESOE report for 2024, the government indicates that major projects are expected to lead to a significant increase in the import of specialised services.

With regard to FDI for 2025, an improvement is expected, mainly influenced by the resumption of investments by Total Energies in the Rovuma Basin.

The minimum eligible value of FDI for the purposes of the benefits referred to above is MZN7.5 million (approximately USD117,000 – note that the principle is that at least USD100,000 shall be invested).

Investment projects approved under the legislation are eligible for the following benefits, based on their location and/or activity:

• guarantee of protection of ownership rights;
• guarantee of the transfer of funds (profits or dividends, royalties, amortisations and interest from loans and foreign capital invested and re-exportable abroad; and
• grant of tax benefits.

The Investment Law and the Tax Benefits Code apply to investments of an economic nature carried out in Mozambique which intend to benefit from the guarantees and incentives set above, including those investments carried out in industrial free zones and in special economic zones, regardless of the nationality and the nature of the investor. Notwithstanding, this legislation shall not apply to investments made or to be made in the areas of prospecting, research and production of petroleum and gas and in mineral resources extraction industries, which are governed by sector-specific legislation.

Dispute Resolution and Bilateral Investment Treaties

Mozambique is a signatory to the Washington Convention of March 1965 relating to the Settlement of Investment Disputes. Under the investment law, the state agrees to submit disputes with foreign investors to arbitration.

The Investment Law contemplates the following possible arbitration mechanisms.

• Arbitration through the International Centre for the Settlement of Investment Disputes (ICSID) under the Washington Convention of March 1965 relating to the Settlement of Investment Disputes (the “ICSID Convention”).
• ICSID arbitration under the ICSID Additional Facility Rules to the extent that the investor is a national of a state that is not a signatory to the ICSID Convention.
• International Chamber of Commerce Arbitration in Paris. The Multilateral Investment Guarantee Agency (MIGA) – a World Bank affiliate – insures against political risks in Mozambique.

Foreign investors should also take into consideration the protection provided by bilateral investment treaties when structuring their investments. To date, Mozambique has entered into Bilateral Investment Treaties with the following countries: Algeria, Belgium, China, Cuba, Denmark, Egypt, Finland, France, Germany, India, Indonesia, Italy, Mauritius, the Netherlands, Portugal, South Africa, Spain, Sweden, Switzerland, the United Kingdom, the United States, Vietnam and Zimbabwe. In addition, it has treaties for the avoidance of double taxation in place with the following countries: Botswana, India, Italy, Macau, Mauritius, Portugal, South Africa, the UAE and Vietnam.