Troops fire on citizens protesting against the cost of essentials and a lack of accountability.
Mozambique will reverse an increase in the price of bread that sparked deadly rioting last week, and restore some subsidies for electricity and water.
Police in Maputo opened fire on stone-throwing mobs protesting against rising prices food and other resources on Wednesday, killing seven people.
The South African government has closed its embassy in Mozambique following violent riots in the capital Maputo.