The Mozambican parliament on Friday is due to debate the Economic and Social Plan and State Budget for 2022, which aims to “achieve gross domestic product (GDP) growth of 2.9 percent,” reads the document delivered to MPs.
This is a more ambitious projection than the 1.5 percent growth forecast for this year and is “influenced by commodity prices on the international market,” and by the progress of vaccination against covid-19.
The government has set a target of 5.3 percent average annual inflation, wants to “reach US$5.203 billion (4.596 billion euros) in exports of goods,” and to set up net international reserves for six months of imports of goods and services.
The government expects donations to rise 2.5 times, from US$514.8 million (454 million euros) in 2020, a figure similar to that projected for the current year and which jumps to US$1,316 billion (1.162 billion euros) projected for 2022, with donations for special projects and programmes showing the biggest rises.
A budget deficit equivalent to 13.5 percent of GDP is forecast, higher than in previous years (12.7 percent in the 2020 accounts and 9.1 percent forecast for 2021).
An increase in the deficit of the goods account is anticipated, which “stems from the notable increase in imports, especially from large projects, reflecting the implementation of the Coral Sul Project in the Rovuma basin”.
This is the floating platform led by oil company Eni, in transit from shipyards in South Korea and which in January is expected to be installed off the coast of Cabo Delgado to start gas exploration during the year.
However, not all gas projects are moving forward: violence in Cabo Delgado has paralysed Total’s onshore project and this is reflected in a $535 million (€472 million) drop in Foreign Direct Investment (FDI) projected for 2022 compared to 2021.
“The projection for 2022 anticipates a net inflow in the amount of $3.189 billion (€2.816 billion),” with the fall in FDI “largely explained by the change in the previous course of part of the direct investment projects in the northern part of the country,” the budget proposal reads.
In nominal terms, the draft budget provides for 298.916 million meticais (4.1 billion euros) in State revenues, as compared to 450.576 million meticais (6.2 billion euros) in expenditure.
The document said that Mozambique’s foreign debt “continues to be above the recommended levels for low-income countries and is over-indebted.
According to the document, “public debt rose from US$12.37 billion (€10.93 billion) in 2019 to US$12.92 billion (€11.41 billion) in 2020,” 78 percent of which is external debt.
The increase explained “mainly by the IMF disbursement of $308.9 million” for the country to cope with the impact of Covid-19 and by a “worsening of domestic debt driven by the increase in domestic securities financing (treasury bills and bonds) by about 47%.”
The majority of the debt is in the hands of multilateral creditors (37%), bilateral creditors (35%) and holders of Mozam 2032 Eurobonds (7%) – derived from the hidden debts process.
