Maleiane announces 10% $375 mn budget cut; predicts 16.7% inflation

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Maleiane announces 10% $375 mn budget cut; predicts 16.7% inflation

9:33 CAT | 11 Jul 2016

File photo / Minister of Economy and Finance Adriano Maleiane

This year’s (2016) state budget is being cut by 24 bn Meticais ($375 mn), Economy and Finance Minister Adriano Maleiane told journalists after a special Council of Ministers meeting Thursday (7 July). This is a 10% cut in the original 246 bn Meticais budget. The main cuts will be in spending on new building projects and on fuel and travel, including per diems, he said. The budget does not include any payments on government guaranteed debts, which have been judged to be “non-essential”, he said. Two weeks ago Maleiane froze all spending except salaries and pensions until the revised budget is approved by parliament. A revised budget is expected to be submitted to parliament Monday (11 July).

The Minister also made sharp changes to economic predictions. Whereas the original budget had projected inflation this year of 5.6%, he now forecast 16.7%. Economic growth had been projected at 7%, and this is cut to 4.5%. This is in line with IMF predictions, but Standard Bank on 23 June said growth would be only 2%. Fiscal deficit grows from 10.2% of GDP to 11.3%; projected international reserves are halved, from $2.3 bn to $1.2 bn, enough to cover just two months of imports.

Maleiane blamed the economic crisis on the usual collection of drought, flood, war, and global economic situation, but did also mention the drop in donor aid – without actually mentioning the secret loans. (O Pais, Zitamar, AIM 8 July).

By: Joseph Hanlon

Source: News reports & clippings