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Budget Deficit Could Fall to 1.8% of GDP by 2027 – Government

Budget Deficit Could Fall to 1.8% of GDP by 2027 – Government

The government plans to reduce the “significant budget deficit” from 8.1 per cent of Gross Domestic Product (GDP) in 2023 to 1.8 per cent by 2027, according to the Medium-Term Fiscal Scenario (MTFS) approved by the Executive.

According to the document, approved this month by the Council of Ministers and to which Lusa had access this Monday, June 17, the government recognises that, in the fiscal field, “the country faces a significant budget deficit, which was 8.1% of GDP in 2023 and is expected to be 8% this year, influenced by the pressures on public spending, which exceed the resources collected”.

“The growing need to finance social programmes and make investments in infrastructure further aggravates the situation of public finances. However, a more significant drop to 1.8 per cent of GDP is expected by 2027, with fiscal consolidation efforts focused on expenditure containment,” it reads.

In the CFMP 2025-27, it is added that public debt reached 73.8 per cent of GDP in 2023, which raised debt servicing costs to 3.1 per cent of GDP. “Public debt is projected to fall to 67.2 per cent of GDP in 2024 and to continue on this downward path, reaching 60.5 per cent of GDP in 2025. This trajectory reflects a fiscal strategy focussed on primary surpluses and fiscal sustainability.”

The Medium-Term Fiscal Scenario was drawn up by the government with the aim of “translating strategic development objectives into realistic and sustainable financial projections, providing a solid basis for decision-making and the efficient allocation of resources”.

“By projecting public revenue and expenditure for the next three years, financial challenges and investment opportunities can be identified that will help guide effective policies and the efficient allocation of resources,” the document states.

The government estimates that, with measures on the tax revenue side and on the operating expenditure side, it will generate gains of 8.6 billion meticais (126.8 million euros) in 2025, rising to 16.7 billion meticais (244.4 million euros) the following year and to 21.6 billion meticais (315.6 million euros) in 2027.

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