5 December 2007
Maputo — The Mozambican government on Wednesday introduced into the country's parliament, the Assembly of the Republic, a state budget for 2008, that is dependent on foreign aid for 56 per cent of its expenditure.
Finance Minister Manuel Chang told the Assembly that public expenditure in 2008 would reach 89 billion meticais (about 3.6 billion US dollars). This is an increase of 22 per cent compared with the expenditure of 72.9 billion meticais envisaged in the 2007 budget.
The state's revenue will also rise - from 33.3 billion meticais in 2007 to 38.8 billion in 2008. That leaves a deficit of 50.2 billion meticais (just over two billion US dollars) which must be covered almost entirely by foreign aid.
Chang was confident that this money will be forthcoming. The budget, he said, "enjoys a great increase in financial contributions from our cooperation partners. This really bears witness to the good relations and the harmony of interests between the Mozambican state and its partners".
He said 48.8 per cent of next year's foreign aid will take the form of direct budget support, while 51.2 per cent will be earmarked for specific programmes and projects.
To avoid running up unsustainable debts. the government has ensured that over two thirds (68.1 per cent) of this foreign aid consists of grants, while only 31.9 per cent is in loan form.
The budget contains 38.1 billion meticais for running costs, of which 18.8 billion is for wages and other staff costs, 8.1 billion for goods and services, and 6.9 billion for current transfers (including transfers to Mozambican embassies, and from the central state to the local authorities).
1.3 billion meticais is to service the government's debts (both foreign and domestic). Total debt servicing in 2007 amounted to the equivalent of about 54 million dollars. Over two thirds was interest paid on the internal debt, and less than a third was service on the foreign debt.
Chang said that the debt burden in 2008, when expressed as a percentage of GDP, should decline by 0.3 percentage points. He attributed this to improvements in managing the internal debt, and the various international debt relief initiatives that Mozambique has benefitted from.
The capital budget is 43.9 billion meticais, while state financial operations are budgeted at slightly more than seven billion meticais.
Chang said that "at least 65 per cent" of total expenditure (excluding debt servicing and state financial operations) would be spent on the priority areas for poverty reduction.
Breaking this down by sector, Chang said 18.4 per cent of the budget would be spent on education, 17.5 per cent on the health service (including the fight against AIDS), 13 per cent on infrastructures (notably roads, electricity and water supply), and 18.6 per cent on governance, security (essentially the police force) and the legal system. He announced that there is sufficient money available to recruit 11,990 new teachers, 3,209 health workers, 3,112 policemen and other public order staff, and 356 staff for the legal system.
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