Revenue collected by the state increased by 11.5 per cent in the first nine months of 2024, compared to the same period in 2023, reaching a total of 258 billion meticals (4.2 million dollars). This growth exceeds the increase in expenditure, according to figures from the Ministry of Economy and Finance (MEF), as reported by Lusa.
According to the budget execution balance sheet, current revenue collected in the first three quarters of the year reached 68.6 per cent of the target set by the government for 2024. In 2023, current revenue collected up to September represented 66.6 per cent of the amount forecast for the year, having then reached 232.2 billion meticals.
State spending, on the other hand, grew more moderately. The total spent up to September 2024 was 247.6 billion meticals, an increase of just 1% on the same period last year, when expenditure totalled 237.1 billion meticals.
In the first nine months of 2024, the government executed 73 per cent of the funds budgeted for expenditure, the total for the year being 339 billion meticals. This level of execution represents a slight decrease compared to the equivalent period in 2023, when the amount spent corresponded to 74.9 per cent of the 316.4 billion meticals forecast at the time.
The Weight of the Wage Mass in Public Finances
The International Monetary Fund (IMF) recently pointed out difficulties in containing spending on the public sector wage bill in Mozambique, one of the main areas of state spending. In a July report, the IMF emphasised that the reduction in spending on salaries was ‘more difficult than expected’, pointing to the impact of the implementation of the new Single Salary Table (TSU) as a challenge for the stability of public finances.
The IMF document estimated that spending on the wage bill would represent 72 per cent of tax revenues in 2023, constituting, according to the organisation, a ‘heavy burden’ on state finances. The application of the TSU resulted in overruns which, in 2022, corresponded to 3.3 per cent of the Gross Domestic Product (GDP). Despite a slight reduction in this burden to 15.1 per cent of GDP in 2023, the figure still remained above the budget limit of 13.8 per cent set by the government.
The IMF recognised, however, that some of the measures implemented made it possible to reduce the wage bill by 1.3 percentage points of GDP in 2023. However, this decrease fell short of the target of three percentage points set in the State Budget for the same year, partly due to pressure to adjust subsidies in the health sector.
Impact on State Finances and Social Policies
The increase in revenue and the relative containment of expenditure are seen as positive signs for Mozambique’s budget balance, although pressure on the wage bill continues to limit the state’s ability to invest in priority sectors such as social support and development infrastructure.
The MEF will continue to monitor budget execution and revenue and expenditure indicators in order to ensure that the targets set for 2024 are met, while remaining attentive to the challenges in the area of the wage bill.
