Mozambique: Tax revenue from gas estimated at €75.2M per year up until 2027

Login

Register

http://www.clubofmozambique.com/

Mozambique: Tax revenue from gas estimated at €75.2M per year up until 2027

8:13 CAT | 19 Jun 2024

FILE - For illustration purposes only. [File photo: Eni]

The production and export of natural gas is expected to yield Mozambique an annual average of 5,154 million meticais (€75.2 million) in tax revenue through to 2027, according to the government.

In the Medium Term Fiscal Scenario (CFMP) for the period 2025-2027, approved this month by the Council of Ministers and to which Lusa had access today, the government foresees an inflow of tax revenue from the production and export of natural gas of 4,268 million meticais (€67.5 million), rising to 5,016 million meticais (€73.2 million) in 2025.

In 2027, this revenue is expected to rise to 5,445 million meticais (€79.5 million), equivalent to 0.27% of estimated gross domestic product (GDP).

Mozambique has the third largest natural gas reserves in Africa, estimated at 180 million cubic feet.

“The production and export of liquefied natural gas and gas condensates from Coral Sul is expected to reach 90% of total capacity in 2024 and will remain constant until 2027. In 2027, a further increase is expected with the start of production at Coral Norte, operating at 20% of total expected capacity,” the document further explains.

The total state revenue estimated in the document for 2025 is 416,439 million meticais (€6,080 million), rising to 488,329 million meticais (€7,130 million) in 2027.

The document adds that, in 2023, state revenue “did not reach the expected nominal amount” of 357,063 million meticais (€5,213 million), remaining at 328,280 million meticais (€4,793 million).

“Despite not having reached the forecast, there was a significant increase compared to 2022, with revenue collection reaching the amount of 285,966.4 million meticais (€4,175 million),” the document reveals , adding that contributing to this performance were the “reduction in the growth rate of important sectors of the economy, such as agriculture, fishing, manufacturing, construction, electricity, gas and water, negatively affecting revenue”.

Also influential were “the resurgence of crime in the neighbouring Republic of South Africa, which reduced imports”, natural calamities, which limited the movement of people and goods and affected production, and the effects of the war between Russia and Ukraine.

“State revenue is expected to grow at a stable pace, without major fluctuations, between 2025 and 2027, reaching an average of 25.7% of GDP, which is equivalent to 460,358 million meticais (€6,772 million). This growth will be driven by the implementation and consolidation of tax measures foreseen during the CFMP period,” the text reads.

The Medium-Term Fiscal Scenario was prepared by the government with the aim of “translating strategic development objectives into realistic and sustainable financial projections”, providing “a solid basis for decision-making and the efficient allocation of resources”.

“By projecting public revenues and expenditures for the next three years, financial challenges and investment opportunities can be identified that will help guide effective policies and the efficient allocation of resources,” the document states.

The government expects, with measures on the tax revenue side and the operating expenditure side, to generate gains of 8,683 million meticais (€126.8 million) in 2025, which will rise to 16,735 million meticais (€244.4 million) the following year, and to 21,617 million meticais (€315.6 million) in 2027.

Source: Lusa