Maleiane says govt will not resort to borrowing to pay wages in 2021 – report

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Maleiane says govt will not resort to borrowing to pay wages in 2021 – report

2:14 CAT | 03 Dec 2020

Photo: O Pais

The government says it will not resort to borrowing to pay civil servants’ salaries in 2021, although it expects to hire more than 17,000 people. The government says that it may resort to borrowing, but only for investment expenses.

Minister of Economy and Finance Adriano Maleiane says that “there is a difference of 15 billion [meticais] that could be available to make investment, but that is only little, because we need 84 billion [meticais] for investment, for which we have to go to the domestic or foreign market”.

“In practical terms, the state does not go to the banking sector or to the central bank to borrow money to pay salaries – because that already it already manages to do , or to pay for goods and services. Yes, it might have to go to the central bank for cash flow deficit, that is, when the revenue collected is not enough to pay for that month’s expenses,” Minister Maleiane explained.

Where cash flow demands that the government goes to the central bank, the amount obtained serves to pay the expenses of the moment, and as soon as the government is able to collect the arrears, it pays its bills.

In its State Budget Proposal for 2021, the government foresees that state expenditure will increase from 345.3 billion meticais, in 2020, to around 368.5 billion meticais.

In the list of expenses that the government proposes appear personnel expenses – 134 billion; promotions and career change – 1.8 billion; spending on social protection – 9.7 billion meticais; medication purchase – 10.5 billion meticais; defence and security forces – 31.7 billion meticais; public investment – 43.7 billion.

Presenting details of the 2021 budget proposal in Parliament this Wednesday, the Minister of Economy and Finance said that the government will collect 265.5 billion meticais in revenue, and explained where the deficit will come from.

“The budget deficit is estimated at 102.9 billion meticais, corresponding to 9.1% of gross domestic product (GDP), to be covered, namely by: 1 billion meticais: 2.5 – in balances carried over from capital gains, the equivalent to 0.2% of GDP; 34 in external donations, corresponding to 2.0% of GDP; 25.5 in external credit, equivalent to 2.3 of GDP; and 41 in internal credit, corresponding to 3.6% of GDP.”

The government expects the economy to begin to recover from the Covid-19 crisis in 2021 and to achieve a 2.1% growth. For 2020, however, the government expects GDP to grow by between 0.8% and minus 1.2%, as a result of the pandemic.

By Clemêncio Fijamo

Source: O Pais