Mozambique has once again failed the annual examination of fiscal transparency carried out by the US State Department. The good news is that the report marks significant progress, something that had only happened twice in the last eight years.
The ‘Fiscal Transparency Report’, drawn up by the United States (US) Department of State, annually reviews the fiscal transparency of each government in order to determine its eligibility for financial assistance. The analysis focuses on budgetary information, which includes the proposed State Budget (SB), the approved version and the execution report, as well as, where relevant, contracts for the exploitation of natural resources.
Analysts use three main evaluation criteria: the accessibility of budget information (when it is published and how it can be consulted), the quality of the data (for example, whether there is detailed information on revenue – by source and type – and expenditure by Ministry) and the reliability of the financial statements (whether they comply with international standards and whether they are audited by independent entities). Finally, there is a fourth criterion, very relevant to Mozambique, relating to the transparency of contracting and licensing for the extraction of natural resources.
South Africa moved up to the group of compliant countries
By analysing these four criteria, the report classifies countries into those that do or do not meet the minimum requirements for fiscal transparency. Within the group of non-compliers, it is also indicated which countries have made significant progress compared to the previous year. In the 2024 edition, the report concludes that of the 140 countries analysed, more than half of the governments (72) meet the minimum transparency requirements, while 68 do not. Of those that didn’t meet the threshold, only a third of the countries (24, including Mozambique) made progress. These figures are almost identical to those in the 2023 report.
As far as African countries are concerned, of the 51 assessed (Equatorial Guinea is not on this list), 14 fulfil the minimum transparency criteria. What’s new compared to last year is that South Africa has joined this group, which includes Botswana, Burkina Faso, Cape Verde, Côte d’Ivoire, Ghana, Kenya, Morocco, Namibia, Nigeria, Seychelles, Togo, Tunisia and Uganda. Of the 37 non-compliant countries, only 12 have improved the quality of their procedures: Angola, Burundi, Central African Republic, DRC, Congo, Djibouti, Egypt, Eswatini, Liberia, Mauritania, Mozambique and Tanzania.
In terms of the quality and reliability of the data, the report praises the government for having eliminated the off-budget accounts, which were subject to proper auditing and supervision
Mozambique’s presence among the ‘least transparent’ countries is nothing new: the country has received this classification since the first report in 2017. The good news is that this is the third time that the US State Department has recognised significant progress (the others were in 2021 and 2022).
Where Mozambique is most (and least) transparent
Analysts consider that the government has fulfilled the criterion of accessibility of information, since it published the proposed State Budget, the enacted budget and the end-of-year report online within a reasonable timeframe. At the same time, it also made information available on public debt obligations (including the main debts of the state business sector) and on the awarding of contracts for the exploitation of natural resources.
In terms of the quality and reliability of the data, the report praises the government for eliminating off-budget accounts (which were subject to proper auditing and supervision), and for providing a solid legal framework for the country’s new sovereign wealth fund. Furthermore, with regard to the parts of the budget that were reasonably complete, the report considers that the information had a satisfactory level of reliability.
In terms of supervision, the analysts consider that the supreme audit institutions complied with international standards of independence and not only audited the entire annual budget, but also included substantial considerations in their reports. They add that the government seems to have followed the recommended procedures for awarding contracts and licences for the exploitation of natural resources, namely by specifying them by law or regulation.
On the negative side, the experts emphasise two points in particular. On the one hand, the budget documents fail to detail all the appropriations and revenues of the public companies and do not itemise support expenditure for the executive offices. Secondly, they have not been drawn up in accordance with internationally accepted principles, which makes it impossible to obtain coherent financial statements that are comparable with other countries.
The report also adds that last year Mozambique was one of the African countries that benefited (in addition to Algeria, Angola, the DRC, Liberia, Libya, Mauritania and Sierra Leone) from the Fiscal Transparency Innovation Fund, worth 7 million dollars, which aims to help governments draw up more reliable, participatory and transparent budget documents.
At the level of the Portuguese-speaking African countries (PALOP), there is a variation in performance in terms of fiscal transparency. For example, São Tomé and Príncipe received the most criticism in the report accusing the government of not publishing its budget proposal online.
With regard to Angola, the State Department said that the country had made significant progress in publishing income and spending in budget documents made public, although it had not included detailed allocations, income and debt information for public companies.
Text: Jaime Fidalgo – Photo: D.R.
