Maputo, Ãug. 19, 2025 (Lusa) - Mozambique’s government has acknowledged that the transition following the conclusion of funding from the US agency USAID, including for projects in Mozambique, “represented a significant external shock” with impacts on health, agriculture and employment, presenting an opportunity to strengthen and potentially transform basic services.
In a document on budget execution for the first half of the year, consulted by Lusa, on Tuesday, the government acknowledges that the suspension of funding in January by the US Agency for International Development (USAID), and its subsequent closure, prompted it to “redirect internal resources to safeguard basic services”.
“In this context, the government has adopted policy measures aimed at ensuring the sustainability of essential services and stimulating the national economy,” the document from the Ministry of Finance also stated.
“These measures include the reorientation of public spending, mobilisation of internal resources, support for national production, strengthening of social protection and improvement of budget management efficiency, thereby mitigating the effects of any interruption in foreign aid and promoting the country’s economic and social resilience,” it added.
The rating agency Fitch acknowledges that the suspension of US aid to Mozambique by USAID has also had an impact on the foreign currency shortage felt in the country, representing 3% of Mozambique’s GDP, Lusa reported on 4 August.
“Foreign currency availability declined in 2025, partly due to reduced external disbursements to the government and the suspension of USAID,” Fitch wrote in its latest rating assessment of the country, stressing that the US agency disbursed $586 million (€505 million) in aid to Mozambique in 2024, mainly for projects related to health and education, “equivalent to 3% of gross domestic product (GDP)”.
Earlier this year, the US government, led by Donald Trump, paused USAID’s activities. USAID was founded in 1961 to provide international humanitarian support, with significant funding in the health sector in Mozambique. On 1 July, agency officials announced the agency’s permanent closure.
At least 2,500 jobs became redundant in Mozambique when the United States reduced its foreign aid through USAID, according to July data from Mozambique’s government, which acknowledged that this presented “a challenge” for the economy.
“The last meeting I had with the group created from the organisations that work and benefit from the funding, they spoke of around 2,500 jobs,” said the Minister of Labour, Gender and Social Action, Ivete Alane, while emphasising that an official estimate is still pending.
PVJ/ADB // ADB.
Lusa
