Mozambique expects Sovereign Fund support for economic recovery

The Mozambican government has stated that the transfer of US$109.9 million to the Sovereign Fund of Mozambique (FSM) in December will contribute to economic recovery in a “context of contraction” in the country. “It can contribute to GDP recovery in a contraction context by ensuring macroeconomic stability and fiscal predictability, allowing the State to maintain public investment even in adverse periods,” reads the 2025 budget execution report on the Sovereign Fund of Mozambique, which is funded with 40% of gas exploitation revenues, as provided for by the legislation that created it. The budget execution document from the Ministry of Finance, accessed today by Lusa, emphasises that the Sovereign Fund, “coordinated with budget expenditure, can help sustain strategic sectors with high multiplier effects, stimulating production, employment and domestic demand.” “At the same time, the existence of sovereign savings reinforces investor confidence, reduces macroeconomic risks and alleviates inflationary and exchange rate pressures, creating favourable conditions for the gradual and sustainable resumption of economic growth,” it underlines.

Economic activity in Moçambique fell by 0.85% in the third quarter year-on-year, marking a full year of consecutive declines, according to data released in December by the central bank, which attributed the performance to the “effects of post-election tension.” Earlier, a contraction of 5.68% was recorded in the fourth quarter of 2024, a period of strong contestation following the general elections of 9 October, with further declines of 3.92% and 0.94% in the first and second quarters of 2025, respectively. Meanwhile, the value of the FSM grew by almost 6% in the first month of central bank management, reaching US$116.41 million (€98.2 million) following a new capital injection, according to data reported by Lusa in January. On 10 December, the government transferred the first US$109.97 million of gas exploitation revenues to the Bank of Mozambique (BM) to capitalise and launch the FSM’s operations.

According to an update fromthe central bank, by the end of 6 January the fund’s market value had risen to US$116.41 million, after closing December at US$110.18 million (€93 million). This increase is largely explained by a new capital injection of US$6.159 million (€5.2 million) made by the government on 6 January. The Sovereign Fund of Mozambique “is owned by the State” and aims “to accumulate savings for future generations through the collection of revenues from oil and natural gas exploitation and the results of the respective investments,” and “to stabilise the State Budget in cases of oil revenue volatility.” Parliament approved the creation of the FSM on 15 December 2023, funded by natural gas exploitation revenues, which are expected to reach US$6,000 million (€5,123 million) annually by the 2040s.

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The Sovereign Fund was established in April of the following year, and since then legal changes have mandated that 40% of tax and capital gain revenues from gas and oil exploitation be allocated to the fund, with the remaining 60% financing the State Budget. Moçambique has three approved megaprojects for the development of the Rovuma Basin gas reserves, ranked among the largest in the world, off the coast of Cabo Delgado. These include a TotalEnergies project of 13 million tonnes per annum (mtpa), now resuming after suspension due to terrorist attacks in the region, and an ExxonMobil project (18 mtpa) awaiting a final investment decision, both on the Afungi Peninsula.

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