December 14, 2010

Assembly passes budget for 2011

The Mozambican parliament, the Assembly of the Republic, has passed the second and final reading of the budget for 2011, with the opposition continuing to insist that the budget is "not transparent" and dedicates more money to "repressive bodies" than to development. The claim that the government spent more money on the police, the armed forces, the intelligence service (SISE) and on President Armando Guebuza's office than on social services and productive areas is made every year. This time deputies of the former rebel movement Renamo were particularly insistent in their claims that the government spends "vast sums" on SISE and on the police. "This has nothing to do with the fight against poverty", declared Renamo deputy Carlos Manuel.

Yet Finance Minister Manuel Chang explained to the Assembly that, in reality, the education and health services receive over 25 per cent of the budget, while the armed forces, the police, SISE and the Presidency taken together only receive 4.2 per cent. Chang furthermore said that he regarded Renamo’s continued claims about expenditure on SISE and the police as "deliberate distortions". There was no mystery - the figures were there in the budget, where everyone could read them. "To obtain a full picture of the budget, you have to add up the sums allocated at central, provincial and district level", Chang added,

An objection from the second and smaller opposition grouping, that of the Mozambique Democratic Movement (MDM), was that half the sum allocated to subsidies was unexplained. "Part of this budget is not transparent", claimed MDM deputy Agostinho Ussore. "Half of the sum for subsidies will be spent to subsidise wheat flour and urban transport. But what's the other half for?"

According to Chang, the rest of this item was to subsidise the operational deficits of publicly owned and state companies. He thought this was quite clear in the budget, and the opposition deputies had failed to read it in detail.

The budget was eventually passed by 173 votes to 55. The Assembly also passed a resolution approving the government's social and economic plan for 2011, which will be financed by the budget. The main targets in the plan are for an economic growth rate of 7.2 per cent in 2011 (an increase from the projected growth rate this year of 6.3 per cent), and for an annual average inflation rate of around eight per cent. If this is achieved, it will be a considerable improvement on the current annual inflation rate of over 12 per cent. The plan also envisages a growth in commodity exports to reach 2.4 billion dollars in 2011, an increase of 15 per cent on the projections for this year. Net international reserves in 2011 should be enough to finance 4.3 months of imports of goods and services.

The budget envisages total public expenditure of 132.4 billion meticais (about 3.8 billion US dollars, at current exchange rates). State revenue, mostly from taxation, is expected to reach 73.3 billion meticais, leaving a deficit of 59.1 billion meticais to be covered by grants and loans. (AIM)

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