Covid-19: Mozambique govt uses 74% of funds made available by partners to minimise budget deficit

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Covid-19: Mozambique govt uses 74% of funds made available by partners to minimise budget deficit

3:04 CAT | 26 Aug 2020

Photo: O País

The Mozambican government has already received US$448.5 million of the US$700 million that it had asked from partners to respond to the negative effects of the Covid-19 pandemic. Of the amount made available, US$334 million, about 74%, is to be used to minimise the deficit in the state budget.

Because the Covid-19 pandemic found the country lacking sufficient financial and material resources to respond to its negative effects, the Mozambican government raised a request for support internationally.

At the time the alarm was sounded, US$700 million dollars was needed, of which the executive has so far received about 64%, that is, US$448,540,347.59. Of this amount, US$79.5 million went to the Ministry of Health, US$20 million to vulnerable families, and US$15 million to finance companies through the National Investment Bank, BNI.

“The remainder of the disbursements in the amount of US$334,000,000.00 (were) to support the State Budget, US$294,000,000.00 being a credit from the International Monetary Fund and US$40,000,000.00 in donations from the African Development Bank. (The amount) will be used according to the prioritisation of needs within the State Budget,” the Ministry of Economy and Finance says.

According to the report on the Status of Commitments in the Scope of Covid-19, published this Tuesday by the ministry, the execution of the funds destined for the state budget will appear in the periodic Budget Execution Reports.

“The Government provides semi-annual information on the execution of the Economic and Social Plan and State Budget to the Assembly of the Republic, within 45 days of the end of the semester, and also provides quarterly information to the Assembly of the Republic on the Execution of the State Budget, published in the Bulletin of the Republic,” the note from the Ministry reads.

To allocate financing to companies, the Banco Nacional de Investimentos (BNI) created a Special Credit Committee, which has already approved 45 project proposals across the country worth around US$9.9 million dollars (658 million meticais).

When the government requested the amount [of US$700 million], its intention was to allocate US$100 million for the prevention and treatment of the new coronavirus, US$200 million to minimise this year’s budget deficit, US$240 million to transfer to the neediest families, and US$160 million to finance companies, the Ministry of Economy and Finance says.

A large part of the amount made available by the partners comes from the IMF, which disbursed US$324 million (73%) for the government, of which US$309 million comprised the Rapid Credit Facility to meet the fiscal needs resulting from the reduction of tax revenue collection due to the weak economic performance, and US$15 million came in the form of debt service relief through financing granted in support of the balance of payments.

“The disbursement related to Debt Relief was channelled to the Ministry of Health (MISAU), and the one referring to the Rapid Credit Facility (US$15 million) was channelled to the BNI to support the private sector,” the document explains.

By Clemêncio Fijamo

Source: O País