Mozambique: Civil society questions using the Sovereign Fund to finance State Budget

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Mozambique: Civil society questions using the Sovereign Fund to finance State Budget

7:49 CAT | 13 May 2025

in file CoM

The Civic Movement on the Sovereign Fund in Mozambique today said the government’s intention to use the fund to finance social projects, as provided for in the 2025 State Budget, is illegal, asking the executive for explanations.

“This is illegal, it is a violation, it violates the law, because the law [on the Sovereign Fund] clearly states that you cannot withdraw from the sovereign fund at will. The Government has to justify why the portion that goes to the Sovereign Fund, corresponding to 40%, will no longer go, it has to justify this in the document [Economic and Social Plan and State Budget – PESOE 2025],” Fátima Mimbire, coordinator of the Civic Movement on the Sovereign Fund, which brings together civil society organizations, told Lusa.

At stake is the 40% of the €69.2 million in revenue from the exploration of liquefied natural gas (LNG) that Mozambique expects to collect this year, with the percentage going to the fund financing its first 15 projects in 2025, including 12 new secondary schools.

According to the Civic Movement, the government has not yet justified, nor is it included in the PESOE, approved on Saturday by the Mozambican parliament, the reason for using the percentage from the Mozambique Sovereign Fund (FSM) to finance social and economic projects.

“This is not clear in the PESOE. So, in what document does the Government explain that it needs to withdraw this 40% to invest in these areas? Who did it consult, who did it ask for authorization to reach this decision,” asked Fátima Mimbire.

“We are demanding that the Government correct the PESOE and clarify how this issue should be handled, this confusion regarding the Fund’s revenues, that it is necessary to safeguard the portion that goes to the Sovereign Fund, because it is important to emphasize that the Fund does not exist for decoration, but because one of the important macroeconomic variables is savings”, he added, recalling that the fund was also created to meet the country’s needs in times of crisis.

The PESOE defines projects to be financed this year by the FSM, such as the construction of two cold storage warehouses for the preservation of products in the industrial parks of Beluluane and Topuito, for 45.5 million meticais (€627.5 thousand), or the co-participation, with 27.5 million meticais (€380,000), of the completion of the construction of two feed factories, in Nampula and Niassa.

The production, distribution and planting of 6,674,660 cashew tree seedlings is also planned, costing 90 million meticais (€1.2 million), and maintaining “95% or more coverage of fully vaccinated children under one year old”, with 416.4 million meticais (€5.7 million).

Among the 15 projects to be financed by the WSF in 2025, as mentioned in PESOE, are also the allocation of means of production to 468,169 households, at 201.3 million meticais (€2.8 million), and the expansion and rehabilitation of water supply infrastructures, worth 679 million meticais (€9.4 million).

The acquisition and distribution of 15,080,550 school books for all primary schools is also planned, at a cost of 779.5 million meticais (€10.8 million), and the construction of 12 secondary schools “according to the quality and resilience standard”, for 311.6 million meticais (€4.3 million) and 214 primary school classrooms for 225.8 million meticais (€3.1 million).

The FSM will also purchase and distribute 6,000 school desks and equip five technical and vocational education institutes, for a sum of 287.8 million meticais (€4 million), build ten dams for a sum of 102.1 million meticais (€1.4 million), and distribute 150 kits to stimulate entrepreneurship and the development of small and medium-sized companies in the industrial, agricultural, services and mining sectors, for 137.3 million meticais (€1.9 million).

On 15 December 2023, the Mozambican parliament approved the creation of the FSM with revenues from natural gas exploration, which in the 2040s are expected to reach US$6 billion (€5.29 billion) per year.

Source: Lusa