Mozambique’s 2023 State Budget plans to reduce deficit to 8.7% of GDP

“The budget deficit in 2023 will be 115 billion meticals (1.8 billion euros), equivalent to 8.7% of GDP, which means a decrease of 5.2 percentage points compared to 2022,” reads the document consulted today by Lusa.

The deficit reduction is one of the commitments made by the Mozambican government to the International Monetary Fund (IMF) under the financial assistance program of US$470 million until 2025.

The 2023 numbers are based on a forecast of 5% growth in the economy in 2023 and an impact of tax reforms, all together expected to increase state revenues by about 20% – while total expenditure is expected to grow by around 5%.

In other words, revenue growth is expected to cover the rise in spending.

And for revenues to grow more, the government says that the main tax reforms for 2023 include the reform of VAT and other taxes (corporate and individual taxation) and the customs tariff.

It is expected that the start of gas exploration in Rovuma, off Cabo Delgado, will also contribute about US$19.5 million to state revenues.

The State Budget for 2023 amounts to MZN 472 billion (US$7.4 billion) and is on the agenda of the current parliamentary session, which ends in mid-December.

The document was approved by the Council of Ministers on October 5th and, besides a GDP growth rate of 5%, foresees an inflation rate of 11.5%.

With information from Lusa

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