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Draft State Budget for 2024 Raises Spending By 15%, to 35.3% of Projected GDP

Draft State Budget for 2024 Raises Spending By 15%, to 35.3% of Projected GDP

Mozambican state expenditure will increase by 15% next year, to more than 542,695 million meticais (€7,795 million), according to the 2024 budget proposal that parliament will discuss and vote on this week.

According to documents supporting the proposal for the Economic and Social Plan and State Budget (PESOE) for 2024, to which Lusa had access this Monday, the total budgeted expenditure corresponds to 35.3% of expected 2024 gross domestic product (GDP).

In the same document, the government recalls that state expenses for this year were budgeted at 472,122 million meticais (€6,781 million), corresponding to 35.8% of Mozambican GDP expected in 2023.

According to the budget proposal for next year, which is to be discussed and voted on in parliament on December 6th and 7th, with favourable votes of the Front for the Liberation of Mozambique (Frelimo) majority guaranteed, the largest share of expenditure goes to wages and salaries, which grows to 191,747 million meticais (€2,756 million), equivalent to 12.5% of GDP, while debt burdens increase to 54,183 million meticais (€778.9 million), 3.5 % of GDP.

Investment expenditure will increase to 137,297 million meticais (€1,974 million) in 2024, equivalent to 8.9% of GDP.

The Mozambican government estimates state revenues of more than 383,537 million meticais (€5,514 million) in 2024, equivalent to 25% of GDP, which will represent a deficit of more than 159,488 million meticais (€2,293 million), corresponding to 10.4% of GDP.

Mozambican GDP is expected to grow to 1.536 billion meticais (€22,084 million) in 2024, corresponding to expected economic growth of 5.5%.

To achieve its objectives, the government states that the PESOE 2024 proposal “is based on increasing and improving access to the provision of basic services to the population”.

“Guided by prioritizing the allocation of resources in the economic and social sectors, prioritizing the development of human capital and protection of vulnerable layers, as well as the orientation of resources to carry out investments in programs with the potential to generate income, create jobs and capital accumulation,” the document reads.

Additionally, the government “will continue with the implementation of reforms within the scope of the Economic Acceleration Measures Package (PAE), with prospects of sustaining the pace of economic growth, improving the business environment and strengthening the framework of transparency, good governance and combatting corruption”.

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“In this regard, the main reform actions will be centred on the creation of tax incentives to promote growth, reducing bureaucracy and simplifying procedures, attracting Foreign Direct Investment (FDI), combating money laundering and increasing the efficiency and effectiveness of state institutions,” it continues.

To “maintain the pace of fiscal consolidation and the improvement of public debt sustainability parameters in the medium term”, PESOE 2024 “maintains the restrictive course of budgetary policy”, with “a reduction in the level of total expenditure as a percentage of GDP of about 0.5 percentage points”.

“Improving fiscal sustainability in the medium term will create conditions to safeguard macroeconomic stability and the gradual creation of fiscal space to increase public investment and the economy’s ability to cushion external shocks,” the document concludes.

Lusa

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