PREVIEWA year of crisis management by Frelimo has left the economy in bad shapePresident Daniel Chapo’s hopes of securing a new International Monetary Fund loan on softer terms have been squashed after the Fund stated that major fiscal reforms and a devaluation of the metical would be prerequisites for any new loan agreement. ‘Under existing policies, chronic fiscal deficits and reliance on costly domestic debt, combined with weaker economic growth, result in an unsustainable debt path,’ the IMF said. ‘Overall public debt is in debt distress, due to persistent debt-service arrears, while external debt is assessed at high risk of debt distress,’ it added. Last November, the Fund recommended measures to cut public spending and boost tax revenues, and complained that successive governments had failed to deal with its growing debt burden. Only weeks ago, Chapo said that a planned March staff visit by the IMF could produce an agreement on a new loan facility.

Source: The North Africa Journal February 22, 2026 18:59 UTC