Mozambique: External financing “skyrockets” in Maputo Council budget – report

Login

Register

http://www.clubofmozambique.com/

Mozambique: External financing “skyrockets” in Maputo Council budget – report

3:08 CAT | 31 Jan 2020

File photo: Lusa

Maputo Municipality’s 2020 budget is increasingly dependent on external financing, figures collected by ‘O País’ seem to show.

External financing accounts for 41% of the total budget approved for 2020, against only 2% in 2019. At the same time, municipal revenues have fallen from 54 to 34%.

The Municipal Council of the City of Maputo needs 7.3 billion meticais for the realization of its budget in 2020. This figure represents a 77% expansion in relation to the budget for 2019, which was 4.1 billion meticais.

According to the budget approved by the Municipal Assembly of the City of Maputo last December, the municipality is more dependent on external financing in 2020 than it was in 2019. Data show that external financing is expected to move from only 2% of the total budget in 2019 to 41% in 2020, representing an increase of 39 percentage points in terms of budget weight.

Considering that the total budget is 7.3 billion meticais, it means that the Maputo municipality will have to mobilise around 3 billion meticais to cover its total expenses this year.

In effect, the municipality’s own revenues have fallen from 54% to 34%, a reduction of 20 percentage points in the total budget weight.

Also falling are the contributions of State Transfer, dropping from 35 to 19%; Transfer of the Municipal Mobility and Parking Company, from 6 to 5%; and Refunds of Funds from the Urban Poverty Reduction Programme, from 3 to just 1%.

On the other hand, Investment Expenses now represent a higher amount than Operating Expenses in the city of Maputo, in line with the growing need for investments in urban infrastructure, especially roads and drainage ditches in the country’s capital.

In 2019, Investment Expenses represented 48% of the total budget, increasing by 15 percentage points to 63% in this year’s budget.

In this context, expenses related to the Construction and Rehabilitation of Municipal Infrastructures, in addition to the Purchase of Machinery, Furniture and Means of Transport will take up 4.5 billion meticais, with the Construction and Rehabilitation component alone having an allocation of 4.1 billion meticais.

In nominal terms, Operating Expenses, which are essentially the Payment of Wages and Purchase of Current Goods and Services, are expected to consume around 2.8 billion meticais.

Municipality justifies growth in external financing with central government loan

The Municipality of Maputo says that the growth of the external component in the budget for 2020 is due to the incorporation of a financing contracted by the central government with the World Bank. In total, US$6 million will be spent on urbanisation and re-qualification of informal settlements projects in Maputo.

Councillor for Finance of the Municipality of Maputo Eduardo Nguenha explained to ‘O País’ that, in 2019, the municipality’s budget did not benefit from the interventions of the cooperation partners, and this year, the incorporation of borrowings is foreseen by the central government.

Projects financed by the World Bank will be implemented by multiple teams, including staff from the Maputo municipality, within the scope of the Maputo Transformation Programme.

This initiative provides for the implementation of studies to improve informal settlements, the urbanisation of the municipal district of Catembe, and of governance and institutional development.

By Orlando Macuácua

Source: O Páis