12 December 2011
Maputo — Mozambique’s dependence on foreign aid is declining, Finance Minister Manuel Chang told the country’s parliament, the Assembly of the Republic, on Monday.
Introducing the state budget for 2012, Chang said that only 39.6 per cent of public expenditure will be covered by foreign grants and loans, with 60.4 per cent of the budget met by domestic resources.
In the 2011 budget, 44.6 per cent of expenditure was to be covered by foreign aid, and in the 2010 budget the figure was 51.4 per cent.
Chang said the likely fall in foreign aid, in percentage terms, was due to “cautious calculations” by donor countries, who are themselves under enormous budgetary pressure, and to the impact of exchange fluctuations. The strengthening of the Mozambican currency over the past year means that aid can show a decline when expressed in meticais, even if it has gone up when expressed in dollars or euros.
The budget sets total state expenditure for 2012 at 162.5 billion meticais (6.02 billion US dollars). State revenue (mostly taxes) is forecast to bring in 95.5 billion meticais, leaving a deficit of 67 billion meticais to be covered by grants and loans.
The budget will allow the state to recruit 13,000 new workers, Chang said. Of these 8,500 will be teachers, 1,800 will be health workers, and 200 will be for the justice system.
The current budget, covering the state’s running costs, is set at 97.5 billion meticais, and the capital budget at 65 billion meticais.
In the current budget, 49.1 per cent will be spent on wages, 16.8 per cent on goods and services, 15.9 per cent on current transfers, 6.2 per cent on subsidies, and 5.5 per cent on debt servicing.
The subsidies item in the budget, Chang explained, covers the deficits of public companies, and the subsidies “on goods and services that are essential under the programme to mitigate the impact of cyclical shocks on the vulnerable strata of the population” – by which he meant the current subsidies on wheat flout (to guarantee cheap bread) and on urban passenger transport.
The priority sectors for poverty reduction take up 66.7 per cent of the budget, once debt servicing and financial operations have been excluded – which is a considerable improvement on the figure of 59.9 per cent in the 2011 budget.
18.2 per cent will be spent on education (up from 16.5 per cent in the 2011 budget), and 13.4 per cent will go to infrastructures (down from 13.9 per cent).
Under the infrastructure heading, the most significant item is the road programme, which takes up 9.5 per cent of the budget.
Health care (including the HIV/AIDS programmes) takes up 7.9 per cent of the budget – a significant increase on the 7.1 per cent in the 2011 budget, but a long way short of the 15 per cent that African leaders pledged in the Abuja Declaration of 2001.
Another priority sector showing an increase is agriculture – up from 10.6 per cent in 2011 to 11.1 per cent in next year’s budget. Governance, security and the judicial system account for 7.9 per cent of the budget (up from 6.9 per cent in 2011).
Chang said the main objectives of the budget are to maintain macro-economic stability, and to pursue “actions centred on the fight against poverty and on promoting sustainable and inclusive growth”.
The government also hoped to “restore balance to the public accounts in the medium term, and to correct structural imbalances in the balance of payments in the long term”.
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Mozambique: Dependence On Foreign Aid Declining