Fabio Scala africa, Currency, Economy, FDI, Government, Mozambique

Bloomberg: Mozambique Plans 12% Raise to 2017 Spending, Document Shows

Mozambique’s government could boost expenditure by 12 percent to 272.3 billion meticais ($3.5 billion) next year, according to a budget document seen by Bloomberg.

The southern African nation had committed to fiscal restraint after its finances were battered by the decline in global commodity prices and donors froze aid on account of $1.4 billion in debt that the government had kept hidden from creditors.

 

Expenditure in 2017 will be 33.9 percent of gross domestic product, 1.5 percentage points less than this year’s planned disbursement, according to the document that’s currently before a parliamentary budget committee. The coal-producing country has reduced its spending plans for 2016 by about 1 percent to 243.4 billion meticais as donors such as the International Monetary Fund tightened purse strings.

“Fiscal policy in 2017 will continue to pursue the objective of fiscal consolidation started in 2016 and will be geared to the sustainability of public expenditure and reducing fiscal risks,” according to the document.

Rebounding Growth

In 2017, Mozambique expects revenue flows to rise 13 percent to 186.3 billion meticais. It forecasts economic growth rebounding to 5.5 percent, from a revised 3.9 percent this year.

The IMF expects slower expansion of 3.7 percent this year. A team from the Washington-based lender was in the capital, Maputo, last month to assess the state of the economy. The group begun talks with government officials over the terms of reference for an international independent audit for three state-owned companies, whose debt the government had kept undisclosed for a while.

The country, which is developing gas fields that may make it the third-biggest exporter of liquefied natural gas globally, has net general debt equal to 90 percent of gross domestic product, according to estimates by S&P Global Ratings.

The metical is Africa’s worst performing currency this year and has dropped 45 percent against the dollar. The government expects inflation, which accelerated to 22 percent in August, to slow to about 15.5 percent in 2017.

Source:  Bloomberg