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BoM: “Fiscal Pressure Will Remain High in the Short Term”

BoM: “Fiscal Pressure Will Remain High in the Short Term”

The Bank of Mozambique (BoM) expects “fiscal pressure” to remain “high” in the short term in the country, highlighting the 12.3 per cent growth in total state spending in the first half of the year, compared to the same period in 2022.

According to the monthly report on the Economic Situation and Inflation Outlook, published by the BdM, in the short term “fiscal pressure is expected to remain high, taking into account the ongoing negotiations on the implementation of the Single Wage Scale (TSU), debt servicing costs and the need for additional resources to deal with the ‘El Niño’ phenomenon”.

The document also points to “other expenses associated with the electoral process”, taking into account the local elections on 11 October, “despite expectations of a relative improvement in state revenues, resulting from the measures associated with the gradual implementation of the Economic Acceleration Package (PAE) and the improvement of the business environment”.

“The 12.3 per cent year-on-year increase in public spending in the first half of the year, to 195.6 billion meticais, reflects the continued pressure on the state’s financial operations and operating expenses,” the report said, highlighting personnel costs, in a context where public investment remained constrained by limited financial capacity.

Meanwhile, in the same report, the BdM emphasises that in the first half of the year, the value of exports of goods fell by the equivalent of 171 million dollars compared to the same period in 2022, justified “by the sharp fall in the prices of the main export goods on the international market”.

Even so, it is expected that in the short term the volume of exports will continue to grow, favoured by the continued improvement in the performance of major projects, especially natural gas and coal.

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