Mozambican assembly passes revised budget for 2013

The Mozambican parliament, the Assembly of the Republic, on Friday passed the first reading of an revised budget for 2013, which increases expenditure to take accounts of the heavy floods that struck the country in January and February.

Introducing the revised budget, Prime Minister Alberto Vaquina, recalled that 117 people had died in the floods, and over 172,000 had been displaced from their homes.

274,000 hectares of crops (four per cent of the total area sown) had been lost. The deaths among livestock were estimated at 1,500 head of cattle, 8,500 goats and 11,000 chickens and other domestic birds.

Vaquina added that there was serious damage or total destruction to 4,007 kilometres of roads, 30 bridges, 1,456 classrooms, 26 health units (four district hospitals and 22 rural health centres), and 16 houses of health workers.

The floods have affected the projections for economic growth this year, cutting the forecast from 8.4 per cent to seven per cent. The sectors worst hit are agriculture and mining.

The torrential rains damaged the Sena railway line in Tete province, which is the only route to the sea for the country’s coal exports. This forced a halt to coal production, and so the target for 2013 was cut back from 8.9 to seven million tonnes.

Giving details on the revised budget, Finance Minister Manuel Chang said it also took account of the public sector wage increases announced in April, after the annual negotiations at the Labour Consultative Forum (CCT), the tripartite negotiating body between the government, the trade unions and the employers’ associations. These increases (notably nine per cent for teachers and nurses, and 15 per cent for doctors) were larger than the government had estimated when it drew up the budget last year.

A further item of additional expenditure comes from increasing the number of municipalities in the country from 43 to 53 – a decision taken by the Assembly in May. The budget thus needed to increase the funds allocated for the December municipal elections, and to provide the basic funds required for setting up the ten new municipalities.

But Chang also announced new sources of revenue which the government could not rely on when the budget was drawn up. The most important of these is the capital gains tax paid early this year by hydrocarbon and mining companies on shares transactions effected outside the country.

Chang told AIM that the major payment came from the sale of the London-based company Cove Energy to Thailand’s PTT Exploration and Production for 1.9 billion US dollars. Cove’s main asset was its 8.5 per cent share in Area One of the Rovuma Basin, off the coast of the northern Mozambican province of Cabo Delgado, where enormous deposits of natural gas have been found. The capital gains tax netted the Mozambican state 175 million dollars. Although the tax was announced last year, the money only reached the Mozambican treasury in January.

In Rovuma Basin Area Four, where gas has also been found, the Italian company ENI has sold 28.7 per cent of its stake to the China National Petroleum Corporation (CNPC). Initially ENI was reluctant to pay capital gains tax on this deal – but Chang assured AIM the problem has been overcome and this money will be in the revenue side of the 2014 state budget.

2013 revenue was also boosted by an additional eight million euros (10.7 million US dollars) from Germany in direct budget support, and the equivalent of 223.5 million dollars from a variety of other sources of foreign grants and loans.

In all, revenue in the budget has risen from 113.96 billion to 120.49 billion meticais (from 3.82 to 4.04 billion US dollars). Expenditure rises from 174.95 billion meticais in the original budget to 188.72 billion in the revised budget.

The deficit thus rises from 60.99 to 68.23 billion meticais. Most of this is being funded by an increase in foreign grants and loans from 57.42 to 64.65 billion meticais.

The revised budget allocates more funding to the priority sectors for poverty relief than did the original budget. The percentage share of the priority sectors in total expenditure (excluding debt servicing and financial operations) rises from 66.9 to 67.3 per cent. Health care receives a significant boost, rising from 7.7 to 8.7 per cent of the total budget. Expenditure on roads rises from 10.7 to 10.9 per cent, and on water supply and public works from 5.9 to 6.1 per cent. There is a slight increase in the proportion of the budget spent on governance, security and the judicial system, rising from 8.3 to 8.4 per cent, while the expenditure on social welfare rises from 3.2 to 3.4 per cent.

But the share of the budget allocated to education declines from 18.6 to 17.6 per cent, and agriculture’s share falls from 10.6 to 10 per cent. It should be noted, however, that, because of the general expansion of the budget, all these sectors receive additional money in absolute terms. Thus the allocation for education rises from 29.96 to 30.73 billion meticais.

The two opposition parties, the former rebel movement Renamo and the Mozambique Democratic Movement (MDM), opposed the revised budget claiming that it was unnecessary, since nothing had happened that was not forecast last year.

Floods were a normal occurrence, Renamo deputies said, and the government always catered for possible natural disasters in the budget.

Deputies from the majority Frelimo Party retorted that the costs of the January/February floods were much higher than the figures in the Contingency Plan approved last year. These were the worst floods since 2000.

Renamo claimed that the public sector wage increase was also predictable, and so should not require any amendment to the budget. Chang replied that in fact the large wage rises granted to state employees in April were not covered by the existing budget.

He noted that Renamo deputy Jose Palaco, in dismissing the whole notion of bringing the revised budget before the Assembly, seemed to be suggesting that the government should just amend the budget on its own and not bother with parliamentary approval.

When the budget was put to a vote, the 162 Frelimo deputies present voted in favour, and the 40 Renamo and MDM deputies against.

The revised budget will be given its second reading on Monday.

Post published in: Africa News

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