Suspension of international aid sparks Mozambique financial crisis

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Suspension of international aid sparks Mozambique financial crisis

5:38 CAT | 10 May 2016

Voa (File photo)

Cooperation partners finance about 25 percent of Mozambique’s state budget, with funds directed to important sectors such as health and education, but with the revelation of undisclosed debts in the public accounts, donors including the World Bank and the International Monetary Fund have suspended aid to Mozambique.

As a result, Mozambican Prime Minister Carlos Agostinho do Rosario is committed to efforts to increase revenue collection, which currently stands at around 20 percent of the target for this year.

Some economists say that even if the goal is reached, domestic revenues cannot guarantee the operation of all state institutions and suggest other solutions, such as the diversification of the economy, particularly agriculture, which, although it supports more than 70 percent of the Mozambican population, has been neglected.

Economist Celeste Banze says it is necessary for the Mozambican government to take more stringent tax collection measures, “because the suspension of support to the state budget means we rely more on our tax revenues”.

Mozambican minister of economy and finance, Adriano Maleiane, has announced the suspension of civil servant recruitment of as part of an austerity plan which includes cuts in spending on fuel, overseas travels for state officials and other non-essential expenditure.

Source: Voa Portugues