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Current Public Expenditure in Mozambique Increases 16.7% in First Quarter

Current Public Expenditure in Mozambique Increases 16.7% in First Quarter

Current public expenditure in the first quarter of this year grew 16.7% compared to the same quarter in 2021, basically reflecting the reopening of the economy, in a context in which public investment is still conditioned by the State’s limited financial capacity.

In its most recent publication of the bulletin of Economic Environment and Inflation Outlook, the Bank of Mozambique states, however, that the disbursements of foreign aid funds for direct budget support, under the new financial program with the IMF, are expected to boost public spending, especially the investment component that in recent years has been sacrificed to ensure the functioning of the economy.

Analyzing economic activity in the short term, the Bank of Mozambique considers that real Gross Domestic Product (GDP) grew by 4.1% in the first quarter of 2022 and points out that the performance observed in the first quarter of 2022 was determined by the maintenance of the relief of restrictive measures, both domestically and abroad, which contributed to the continued improvement in demand and recovery of the sectors most affected by covid-19, with emphasis on the extractive and manufacturing industries, trade and transport services, and hotels and restaurants.

With regard to the prices of the main commodities and dynamics of the currencies of Mozambique’s trading partners, the Central Bank says that the prospects of slowing growth in the global economy contribute to the deceleration of prices of most commodities.

It maintains that, on the imports side, the highlight goes to Brent crude and wheat, whose prices fell by 5% and 28%, respectively, compared to those reported in the Monetary Policy Committee of May 2022.

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As for export commodities, we highlight the drop in the price of liquefied natural gas (-21%), in a context in which thermal coal continues to register a price increase (+17%), favored by the increased demand for this commodity in Europe.

For the medium term, the outlook points to a pronounced deceleration of food prices in the international market (-89%) and the slight drop in the price of Brent crude (-5.8%), still remaining at high levels.


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