Will they ever learn? Budget shrinks, but state expenditures grow by 7-billion Meticias

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Responding to the “global economic slowdown, the falling price of major export products, natural disasters and reduced foreign direct investment and direct support to the budget”, on Monday 18 July, President Filipe Nyusi’s government presented parliament with a draft amended budget.

According to a report published in O País, the amending budget cuts of MT24-billion will affect public investment, education, justice, the intelligence services, the presidency, the armed forces and social welfare. The headline figure, however, fails to hide the fact that the budget will also actually increase operating expenses from roughly MT136-billion to MT143-billion with items such as “Other Current Expenditure”, “Current Transfers” and “Debt Charges” receiving more money in the new budget, which was scheduled to go to the vote on Friday 22 July.

Other Current Expenditure:

“Other Current Expenditure” sees the largest growth. The 2015 budget (approved and in place), allocated MT1,283-million to the item, while the amending budget now puts the number at MT10,544-million, no less than eight times the figure originally planned.

It is no coincidence that the allocation has grown so much. “Other Current Expenditure” will provide funds that the State can use to cover last-minute expenses.

According to Finance Minister Adriano Maleiane’s projection, there are figures that have not yet been incorporated and may yet upset calculations, hence the decision to create a “backup” to meet the challenge. Included are the disbursements of co-operation partners and debts guaranteed by the State.

In the first half of this year, donors suspended direct support to the State Budget amounting to US$265-million, and are waiting to see what position the IMF and the World Bank take on Mozambique. Meanwhile, the first repayment of the MAM state-guaranteed debt of around US$178-million has been on hold since 23 May. The more than MT10-billion in the “Other Current Expenditure” item are there to prevent the government from being caught by surprise by just such charges.

Debt charges:

The amended budget will also correct the State’s commitments to creditors, swollen from MT12.5-million to over MT15-billion. The government does not say exactly what these commitments are, but one hefty debt that has passed into state hands is that of Ematum.

In June this year, the Council of Ministers (Cabinet) decided to restructure Ematum loans worth US$350-million into sovereign debt. The decision allowed an extension of the five-year repayment period to seven years, easing installments from US$200-million to US$76-million annually. The amount is to be paid in two annual installments, the first having been released in the first months of 2016. Now the second tranche remains to be paid, and that will come from the new State Budget.

Austerity at the expense of public works:

Savings in government accounts will be made at the expense of public investment, particularly in infrastructure such as roads and bridges. Health and agriculture are to be spared, but education, justice and social welfare have not escaped Minister Maleiane’s cuts.

Two billion in dues:

The State will pay approximately MT2-billion this year in dues to the African Development Bank (AfDB) and the IMF.

Membership of those institutions requires payment of annual dues which were not allocated in the State Budget in current operation and approved in December last year. In the draft amended budget, the expense is incorporated into the Ministry of Economy and Finance’s Current Transfers item.

This information was confirmed by of Finance Ministry spokesperson, Rogério Nkomo, who said that the bill had come to light in recent days, necessitating escalation of the ministry’s budget allocation from MT431-million to MT2,400-million.

Parliament gets MT10-million:

The Casa Militar, which ensures the personal safety of the President, his family and guests, will benefit from the budgetary amendments with an increase in resources from approximately MT864-million to MT917-million.

Parliament’s budget also rises, from MT885-million to close to MT900-million. However, the state security apparatus has not been so lucky, with spending on the Secret Service, Ministry of Interior, Ministry of Defence and Armed Forces falling. The Presidency of the Republic and the Prime Minister’s office share their misfortune, with the Presidency’s MT1,401-million budget falling.

Source: O País

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