MAPUTO, Dec 10 (BERNAMA-NNN-AIM) — Mozambique has in recent years sharply reduced its dependence on foreign aid to finance its public expenditure, says Prime Minister Carlos Agostinho do Rosario, when presenting the 2016 draft Budget in the country’s parliament, the Assembly of the Republic, Wednesday.
In the recent past, Mozambique depended on foreign grants and loans to cover about half of its annual budget but the draft Budget for 2016 unveiled by Rosario and Finance Minister Adriano Maleiane is mostly financed by domestic taxation.
Rosario said that domestic resources would cover 74.8 per cent of total planned expenditure, and foreign aid 25.2 per cent.
“This bears witness to the commitment of our government to increase, gradually and continually, the contribution of domestic resources in financing public expenditure,” he added.
The total expenditure proposed in the budget is 261.1 billion meticais (about US$5.12 billion). Domestic revenue is expected to reach just over 181 billion meticais, leaving a deficit of 80.1 billion meticais.
In nominal terms, the expenditure in the 2016 budget is 15.3 per cent higher than the 2015 expenditure, but as a percentage of gross domestic product (GDP) it is the same, at 38.1 per cent.
The deficit will be funded by 47.6 billion meticais in foreign loans, 19.7 billion meticais in foreign grants, and 12.8 billion meticais in domestic debt, though the issuance of Treasury bonds.
The priority social and economic sectors for the fight against poverty account for 72.9 per cent of planned expenditure, once debt servicing and financial operations are excluded, with 22.9 per cent of spending going on education, 10.8 per cent on health, and 23.1 per cent on infrastructures.
Debt servicing in 2016 is put at 10.1 billion meticais, which is 1.5 per cent of GDP, up from 1.2 per cent of GDP this year.
Most of the allocation — 7.2 billion meticais — is to service the interest on domestic debt, while slightly less than three billion meticais services the foreign debt.One snag here is that the budget was drawn up before the sharp depreciation of the metical in November.
Since the foreign debt is mostly denominated in dollars, expressing it in meticais depends on the exchange rate, which was 42 meticais to the dollar at the end of October, but is now about 51 meticais to the dollar.