21 May 2019

Mozambique: Government Considering Amending 2019 Budget

Maputo — The Mozambican government is considering drawing up a "corrective budget" for 2019, because of the damage caused by the two cyclones that hit the county in March and April.

Speaking to reporters in Maputo on Monday, the National Director of Institutional Coordination in the Ministry of Economy and Finance, Rogerio Nkomo, said the cyclones have seriously affected the forecast for growth this year. At the start of 2019, the prediction was that gross domestic product would increase by 4.7 per cent, but that forecast has been cut back to 2.5 per cent. The forecast for annual inflation has risen from 6.5 to seven per cent.

Nkomo said the revised forecasts for the macro-economic indicators are the first stage in work that will determine whether or not a corrective budget is needed.

"What we are doing now is assessing the impact these indicators will have on inflation, but I want to assure you that, regardless of whether the budget is amended, there are budgetary management mechanisms which allow the expenses inherent to the emergency situation to be paid, and that's what is happening right now", said Nkomo.

Nkomo, who was presenting a report on the execution of the budget in the first quarter of the year, said that adverse weather circumstances had affected budgetary implementation. These included the drought affecting the southern three provinces of Maputo, Gaza and Inhambane, exceptionally heavy rains in parts of the centre and north, and then cyclone Idai, which struck the central provinces on 14 March.

Idai wrecked much of the industrial and agricultural productive capacity in Sofala, Manica, Zambezia and Tete provinces. The government had to spend 506.4 million meticais (about eight million US dollars) on search and rescue missions, food aid, resettlement and other emergency aid.

If the government opts for a corrective budget, it will need to recall parliament to pass it. The current sitting of the Mozambican parliament, the Assembly of the Republic, is drawing to a close. To amend the budget, an emergency parliamentary sitting would be needed, perhaps in August.

Looking on the bright side, Nkomo said that the annual growth rate in the first quarter was 3.3 per cent. The major contributor to this was mining, with a growth rate of 11.7 per cent.

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