Mozambique: Over 50% of 2019 budget deficit funded by loans

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Mozambique: Over 50% of 2019 budget deficit funded by loans

12:25 CAT | 05 Dec 2018

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File photo: TVM

The Mozambican government will fund more than 50% of the State Budget deficit for 2019 with internal and external credit, according to the documents on public spending presented on Tuesday in the country’s parliament.

The Economic and Social Plan (PES) and the State Budget (OE) for 2019 include a deficit of 90.912 billion meticais (€1.29 billion), or 8.9% of the Gross Domestic Product (GDP), an increase of 0.8% of GDP forecast for this year.

In the account presented on Tuesday to the Mozambican parliament, the government said it planned to take on loans amounting to 43.724 billion meticais (€620 million) and internal loans amounting to 19.447 billion meticais (€276 million).

The 2019 Budget will also be financed with 27.740 billion meticais in donations (€394 million), an increase of 0.9 percentage points compared to 2018.

The Mozambican government plans to issue guarantees in the amount of 151.250 billion meticais (€2.1 billion) for the state’s business sector.

Of this amount, 136.125 billion meticais (€1.9 billion), or 90% of the total, will be allocated to the state enterprise sector in the extractive industry.

Speaking on budget deficit financing, during the presentation of the Economic and Social Plan and the 2019 Budget, the Mozambican Prime Minister said the Government will give priority to the use of concessional loans and donations to support part of the expenditure.

“This form of financing the budget deficit shows the Government’s effort to make less use of internal debt and commercial loans, which will reduce the pressure on the banking system, thus freeing up resources for the private sector to finance its activities,” said Carlos Agostinho do Rosário.

Source: Lusa