Mozambique: Fiscal pressure to remain high in short term – Central Vank

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Mozambique: Fiscal pressure to remain high in short term – Central Vank

6:39 CAT | 29 Sep 2023

File photo: Lusa

Mozambique’s central bank, the Bank of Mozambique ,expects “fiscal pressure” to remain “high” in the short term in the country, and underlines a 12.3% growth in total State expenditure in the first half of the year, compared to the same period in 2022.

“In the short term, fiscal pressure is expected to remain high, taking into account the ongoing negotiations within the scope of the implementation of the Single Salary Table, debt service charges, the need for additional resources to face the El Niño phenomenon,” reads a central bank report on the economic situation consulted by Lusa today.

It also points out “other expenses associated with the electoral process”, taking into account the municipal elections on October 11, “despite the expectations of a relative improvement in State revenues, resulting from measures associated with the gradual implementation of the Economic Acceleration Package and improvement of business environment”.

The report also highlights the year-on-year increase in public expenditure, which rose by 12.3% in the first half to 195,647 million meticais (€2,902 million), meaning that this “fiscal execution reflects the continued pressure on financial operations and State operating expenses”.

“With emphasis on personnel expenses, in a context in which public investment remained conditioned on limited financial capacity,” the report points out.

The central bank report also acknowledges the “improvement in Mozambique’s current account balance”, given the “reduction in imports”.

In the first half of the year, the value of exports of goods fell, compared to the same period in 2022, the equivalent of US$171 million (€161.6 million), justified “by the sharp fall in the prices of the main commodities of export on the international market”.

Imports dropped by US$4,110 million dollars (€3,885 million), but this is explained “by the base statistical effect”, taking into account the incorporation in the first half of 2022 of the floating platform of the Coral Sul natural gas production platform, valued at around US$4,200 million (€3,970 million).

“Among the main export products, only gas and heavy sands registered increases, reflecting the volume effect, with the rest suffering significantly from the drop in prices on the international market,” the report further comments.

“It is expected that, in the short term, the volume of exports will continue to grow, favoured by the continuous improvement in the performance of large projects, with emphasis on natural gas and mineral coal,” the document from the Bank of Mozambique concludes.

READ: Mozambique: International reserves guarantee four months of imports – central bank

Source: Lusa