Republic of Mozambique

Mozambique faces deep-rooted development challenges, including widespread poverty, regional insecurity, and high climate vulnerability. However, its natural resource sector holds promise of significant revenue for the country, which—if invested wisely—will allow it to address development needs. On the economic front, growth has been lackluster, while high and persistent fiscal deficits have become increasingly difficult to finance. On the external front, international reserves are adequate, and the exchange rate vis-à-vis the US dollar has been stable. However, real exchange rate appreciation has undermined competitiveness, and growing foreign exchange shortages weigh on economic activity.