El Niño can affect 5.3 million people in Mozambique

The notice is contained in the Ministry of Finance’s Tax Risk Report 2027, which identifies natural disasters as one of the main threats to the sustainability of public finances and the country’s fiscal consolidation strategy.

According to the document, the El Niño phenomenon “is established since mid-May 2026 and should persist throughout the rainy season”, which in Mozambique runs from October to April, and may become “one of the most severe since 1950”, overcoming the episodes recorded in 2015/16 and 2023/24.

Several international organizations have placed in recent months Mozambique as one of the countries most threatened by the next phenomenon El Niño, while predicting it to be one of the most serious ever.

The government's report recalls that precipitation is expected to be below normal in the central and southern regions, where 76 semi-arid districts are concentrated, raising the risk of severe drought, while in the north normal rainfall is expected to be above normal, increasing exposure to floods and floods in an area of the country that already exists in these periods, annually, cyclones and storms.

According to the Ministry of Finance, this climate setting can reduce agricultural production, aggravate food insecurity, compromise energy generation and pressure public spending on health, humanitarian assistance, social protection and reconstruction.

Official estimates point to a deterioration of the overall state balance by €18,453 million (EUR267.4 million) at a severe time, equivalent to 1% of Gross Domestic Product (GDP), as well as an increase in public debt by 1.85 percentage points of GDP.

In an extreme scenario, characterised by widespread drought in the centre and south and cyclones or floods in the north, the impact could reach 34,972 million methics (EUR 506.8 million) and raise public debt by 3,6 percentage points of GDP.

The report stresses that a severe period “practically cancels the budgetary surplus of 18.945 million methics” foreseen for 2027 in the reference scenario.

The document also warns of the combined impact of climate and economic shocks on public debt.

According to official projections, the combination of an extreme macrofiscal scenario with a severe period may raise public debt to 81.4% of GDP in 2027, about 10.9 percentage points above the government's expected reference path.

“ The increasing frequency of extreme events, associated with the high economic and financial vulnerability of the country, may compromise the trajectory of fiscal consolidation and significantly increase funding needs”, warns the report.

In view of these risks, the Government advocates strengthening financial protection mechanisms, including contingent credit, parametric insurance, emergency reserves and other financing instruments to respond to climate shocks.

The Tax Risk Report 2027 warns that Mozambican public finances face a context of “high economic and fiscal uncertainty”, marked by the volatility of international oil prices, geopolitical tensions, pressure on the exchange market, high public debt, exposure to natural disasters and financial weaknesses of the state’s business sector.

It adds that these factors can compromise budget execution, revenue collection and fiscal sustainability, while considering that the sustainability of public finances will depend on the ability to anticipate and mitigate these risks. The evolution of public debt, fuel price shocks, exchange risk, slowdown in economic growth, natural disasters and liabilities associated with public enterprises are the main threats.