Budget envisages growth rate of 5.5 per cent

Maputo, 6 Dec (AIM) – The Mozambican government is projecting an economic growth rate of 5.5 per cent in 2024, based on the positive performance expected from the extractive industry, agriculture and transport.

This is one of the assumptions on which the economic and social plan and the state budget for 2024 are based. The government has presented the plan and budget to the country’s parliament, the Assembly of the Republic, which will debate them on Wednesday and Thursday.

The government’s targets include maintaining an annual rate of inflation of around seven per cent, and exporting goods to the value of 9.7 billion US dollars.

It hopes to constitute net international reserves of 2.235 billion dollars – enough to cover three months’ worth of imports of goods and non-factor services (excluding the mega projects).

The budget’s target for state revenue in 2024 is 383.54 billion meticais (about six billion US dollars, at the current exchange rate), equivalent to 25 per cent of GDP.

Public expenditure will be 542.7 billion meticais, equivalent to 35.3 per cent of GDP.

The budget deficit is estimated at 159.5 billion meticais, or 10.4 per cent of GDP. As usual, the deficit must be covered by grants and loans (both domestic and foreign).

The government’s explanatory document states that “in order to maintain the pace of fiscal consolidation and to improve the parameters of debt sustainability, in the medium term the Plan and Budget will stick to the restrictive course of budgetary policy. In comparison with 2023, expenditure is being cut by 0.5 per cent”.

“An improvement in medium term fiscal sustainability will establish conditions for safeguarding macro-economic stability and the gradual creation of fiscal space to increase public investment, and the economy’s capacity to cushion external shocks”, the government said.

Education accounts for 14.7 per cent of planned public expenditure – a decline from this year’s 16.4 per cent. Education is one of the few areas where the government plans to admit a significant number of new staff. 2,803 primary and secondary teachers should be recruited in 2024.

The net school attendance rate for six year old children should reach 98.9 per cent. The government says this will be supported by the acquisition and distribution of 11,300 school desks, and 22.5 million school books.

The government plans to build 773 primary school classrooms and 22 new secondary schools.

In the health service, the government will hire 1,294 new health professionals. It hopes to maintain the current percentage of institutional births, at 91 per cent of the total.

The number of children under five years of age fully vaccinated should reach 96 per cent – which will correspond to one million vaccinated children.

Defence and security accounts for 12.5 per cent of public expenditure – much more than the 5.5 per cent allocated to health. In the years following the 1992 General Peace Agreement between the government and Renamo, defence expenditure declined dramatically, but it has risen again in recent years, no doubt largely due to the battle against islamist terrorism in the northern province of Cabo Delgado.

In agriculture, the government hopes for an overall growth rate of 5.7 per cent. This will result partly from increasing the area under cultivation by two per cent, and from increasing the number of households with access to means of production. The amount of irrigated cropland should increase from 18,093 to 21,576 hectares.

The number of households assisted by extensionists should rise from 976.250 this year to 1.2 million in 2024.

Grain production should rise by four per cent from 2.6 million tonnes this year, to just over three million tonnes in 2024. Most of this (2.57 million tonnes) will be maize.

A 5.7 per cent increase is expected in the production of root crops, rising from 7.4 to 7.9 million tonnes. The vast majority of this production will be cassava.

But the government warns of the possible impact of the “El Nino” weather phenomenon which could lead to drought in southern and central Mozambique and flooding in the north, with damaging impacts on agriculture.

(AIM)

Pf/ (681)