CIP: Mozambique state budget is “unrealistic”

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CIP: Mozambique state budget is “unrealistic”

3:50 CAT | 14 Apr 2020

Photo: O Pais

The Centre for Public Integrity in Mozambique says that the draft state budget that the government wants to see approved this week disregards the economic impacts of Covid-19 and the effects of postponing investments in the Rovuma Basin.

The Centre for Public Integrity (CIP), a Mozambican civil society organisation, this Monday (13.04) called the proposed State Budget (OE) that the Mozambican government has submitted to parliament, “unrealistic”.

In the CIP’s assessment, the document “takes into account a 2.2% growth trend in Gross Domestic Product, similar to that of 2019” and ignores “the magnitude of Covid-19’s impact on different sectors of the economy, with an emphasis on the extractive sector”.

According to the organisation, the state budget that the Mozambican government hopes to see approved this week also fails to take into account the effect of the postponement of the final investment decision of the consortium led by Exxon Mobil in the Rovuma Basin gas project in northern Mozambique.

Deferred investment

The consortium plans to invest around US$25 billion (€22.8 billion) in its Rovuma project, one of the largest private investments currently planned for Africa.

On Friday (10.04), Mozambique’s Minister of Economy and Finance, Adriano Maleiane, told parliament that the postponement of the decision would not have any impact on the OE, but did not elaborate on this perspective.

The CIP notes that the state budget for this year foresees a 2% increase in personnel expenditure as a result of transfers to the provincial decentralised governance bodies, making the budget expansive.

“The fact that there is no information on the actions provided for in the provincial decentralised governance bodies compromises the veracity of this draft,” the CIP study comments.

Damage from armed violence

On the other hand, the state budget proposal makes no reference to the negative influence of armed violence in the province of Cabo Delgado, ignoring the fact that the action of armed groups in the region has already caused, according to CIP, the death of more than 700 people and the flight of more than 100,000

In its proposal, the executive does not explain the reason for committing itself to transferring only 2.75% of the revenues from the exploitation of natural resources to communities, creating opacity in relation to its legal duty in this regard. In response, the CIP proposes that certain projections in the state budget proposal be revised to make the document more suitable.

Meanwhile, the executive must define the sectors and the list of potential goods and services to be acquired using the exceptional public procurement regime, so as to minimise its illicit use by public agents, the CIP assessment demands.

The state budget proposal for 2020 foresees expenditure of just over 345.3 billion meticais (€4.7 billion), revenue of 235.5 billion meticais (€3.2 billion) and a deficit of 109.7 billion meticais (€1.49 billion).