Mozambique’s government faces pressure from both protesters demanding action on high living costs and the IMF, which urges fiscal restraint. President Daniel Chapo has extended VAT exemptions on basic goods to appease tensions, but this threatens government revenue and conflicts with an IMF-backed program that could secure USD 120 mln in financing. The economy contracted by 4.9% in Q4 2024, resulting in 1.9% full-year growth. Growth is expected to rebound to 3% in 2025, with inflation stabilizing at 7%.