2021 State Budget / Mozambique: Public expenditure to surpass 368 billion meticais – Carta

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2021 State Budget / Mozambique: Public expenditure to surpass 368 billion meticais – Carta

4:48 CAT | 09 Oct 2020

File photo: DW

State expenditure for the 2021 economic year is set at 368,585.1 million Meticais, corresponding to 32% of Gross Domestic Product (GDP), a reduction compared to 2020. The amount appears in the Draft State Budget Law for 2021 deposited by the Government in Parliament, the Assembly of the Republic, on the 29th of September.

For the current financial year, State expenditure was initially estimated at 345,381.8 million meticais. Meanwhile, with a budget review to take place in the parliamentary session starting on October 15, public expenditure will reach 374 billion meticais.

According to the document to which ‘Carta’ has seen, of the total amount of State expenditure planned for 2021, 238,290.5 million meticais are destined operating expenses which, by the way, take the largest slice of the cake. Investment expenses are in the range of 83,282.0 million meticais, and 46,522.5 million go to State financial operations.

In the operating expenses component, the largest tranche will continue to be allocated to personnel expenses, which will absorb around 56.3%. In more detail, personnel expenses will amount to 134,089.0 million meticais, of which 127,021.4 million meticais will correspond to wages and salaries and 7,068.0 million meticais to other with personnel expenses.

Still in operating expenses, but in the aggregate of goods and services, the 2021 State Budget proposal points to 37,348.8 million meticais, which corresponds to 3.3% of GDP. According to the proposal, most of the resources under this heading will be absorbed by the “purchase of medicines for the National Health System in the amount of 10 billion meticais, of which 8.2 [billion] are internal resources; the acquisition of hygiene and cleaning articles for the Education, Health and Social Action sectors in the context of preventing and combating Covid-19, in the amount of 1.9 billion meticais; and the purchase of goods and services to guarantee the normal functioning of the Justice institutions, in the amount of 1.6 billion meticais”.

State revenue for 2021 is set at 265,596.1 million meticais, equivalent to 23.4% of GDP.

Taking into account revenues as well as expenses, the deficit is estimated at 102,999.0 million meticais, equivalent to 9.1% of GDP. The 2020 State Budget law initially contained an estimated deficit of 109,791.5 million meticais.

The State Budget proposal demands that the budget deficit be financed through external donations (estimated at 34,005.9 million meticais); external credits (25,535.5 million meticais); domestic credit (40,957.5 million meticais); as well as balances carried over from capital gains (estimated in the amount of 2,500.0 million meticais).

In the proposal, the Government says that the budget was prepared in the context of the changes imposed by the Covid-19 pandemic. In fact, the Executive mentions in the proposal, that the Covid-19 pandemic presents itself as a main element that could contribute negatively to fiscal risk, since its worsening may require State intervention to mitigate its socio-economic impacts.

The Government estimates economic growth to stand at 2.1% in 2021, which, according to the executive, shows a slow recovery due to the uncertainties caused by the pandemic and the attacks which have been occurring in the provinces of Cabo Delgado, Manica and Sofala.

The growth forecast for 2020 has been revised down from 2.2% to 0.8%, due to the impact of the Covid-19 pandemic.

Still in the macro-economic assumptions that support the 2020 State Budget, the average annual inflation rate is estimated at 5.0% and net international reserves at USD 3,273.3 million (coverage for about six to eight months of imports).

The Economic and Social Plan and the State Budget for 2021 will be debated in the II Ordinary Session of the IX Legislature, whose work is scheduled to start on the 15th of this month.

By Ilódio Bata

Source: Carta de Moçambique