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Parliament discusses amending State Budget because of Covid-19 and war
2:26 CAT | 04 Nov 2020
File photo: DW
The Mozambican parliament is today and Thursday discussing amending the 2020 State Budget to account for the impact of the Covid-19 pandemic and the military conflicts in the centre and north of the country.
“The revision proposal aims to incorporate the financial impact of the pandemic into the State Budget (OE), taking into account the Covid-19 National Preparedness and Response Plan the country is implementing in order to minimise the impact of disease in the economic and social spheres,” the document on which the review is based reads.
The proposal “also aims to incorporate additional expenses for defence and security forces resulting from instability in some areas of Cabo Delgado and the central region of the country”.
“The accounts have to be corrected because State revenue is expected to fall from 235,590 million meticais [€2.7 billion] to 214.141 billion meticais [€2.4 billion],” the document explains, while “public expenditure is expected to grow from 345.381 billion meticais [€4 billion] to 374.096 billion meticais [€4.3 billion]”.
In other words, the budget deficit is likely to increase to 17.9% of gross domestic product, growing 7.1 percentage points in relation to the State Budget approved in April, two thirds of which is expected to be covered by external and internal credits, and the remainder by donations and balances carried over from capital gains.
Support to combat Covid-19
“The proposal aims to incorporate additional domestic financing by increasing the use of capital gains balances and internal credit, as well as external resources resulting from cooperation partners’ commitments to support the fight against Covid-19,” the document outlines.
“The 2020 State Budget approved in April was prepared at a time when the assessment of the effects of Covid-19 was very preliminary, and the extent of its effects was not sufficiently assessed,” it points out.
The current scenario required “an upward adjustment of subsidies to companies and current transfers to families”, in addition to reinforcement of resources for “education, health, water, energy, agriculture, transport, social protection and defence and security forces”.
The rectifying State Budget anticipates a slowdown in the Mozambican economy, lowering the growth forecast for this year from 2.2% to 0.8%.
Conflicts in the north and centre
In Cabo Delgado province, northern Mozambique, an armed insurgency which began in 2017 and has intensified this year has already caused between 1,000 to 2,000 deaths and displaced 435,000 people.
The Islamic State has claimed some attacks since 2019, but the origin of the insurgency remains under debate in the region where the largest private investment in Africa – in the order of $ 25 billion – is being built for the extraction of natural gas.
In Sofala and Manica provinces, in the centre of the country, the self-proclaimed Military Junta of the Mozambican National Resistance (Renamo), a dissident group of the main opposition party, is accused of carrying out armed attacks against buses and private vehicles on some road sections, having already caused at least 30 deaths.
The group rejects the Peace and National Reconciliation Agreement signed in 2019 and is also opposed to the current Renamo leadership.
Source: Deutsche Welle
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