Full Knowledge Base

Key messages: 1. The value of the State Budget for 2020 is MT 345.4 b. The 2020 State Budget marks the beginning of a new governance cycle (2020-2024) and is aligned with the strategic objectives and priorities defined in the new 5-year plan (PQG 2020-2024). However, the current global COVID19-induced economic uncertainty has led the Government of Mozambique to a restrictive approach to the budget aimed at prioritizing the provision of basic services to the population. 2. The Council of Ministry’s Decree n.2/2020 established the principles and norms of the provincial decentralized governance, both political and financial. However, this was not yet reflected in 2020 State Budget. 3. The government’s new overarching development strategy, the “Government’s Five-Year Plan (PQG 2020-2024)” has 3 strategic priorities and 3 strategic pillars. In the 2020 State Budget, Priority II: Promote Economic Growth, Productivity and Job Creation, received the majority of funding, worth 44 percent of budget. Priority I: Develop Human Capital and Social Justice was allocated 35 percent of 2020 State Budget resources. 4. This year the Government has prioritized the allocation of resources to essential sectors, namely Health, Education and Agriculture & Rural Development. The allocation to these three sectors is worth 48 percent of 2020 State Budget (excluding debt servicing and financial operations) or 34 percent of the entire budget. Relative to last year, the allocation to the Education sector increased while those of the Health and Agriculture sectors decreased. 5. In the 2020-2024 PQG, the Government set the goal of allocating 65.2 percent of resources to priority economic and social sectors. This year’s cumulative allocation to priority areas is worth 68 percent of the State Budget less financial operations and debt servicing, or 48 percent of the entire State Budget including financial operations and debt servicing. Of the priority Economic and Social sectors supported by UNICEF, Education was allocated Meticals (MT) 66.3 billions (b), Health MT 26.7 b, Social Action MT 6.7 b and WASH MT 7.1 b in the State Budget for 2020. 6. The allocation to Education increased by 17 percent in nominal terms and by 9 percent in real terms relative to 2019 Budget. The sector allocation is worth 19.2 percent of 2020 State Budget. Excluding financial operations and debt servicing, education represents 27.1 percent. As a share of Mozambique’s GDP, the Education sector’ allocation represents 6.1 percent. 7. The Health allocation represents a 5 percent nominal decrease and an 11 percent real terms-decrease compared to last year’s budget. Such decrease is explained by the heavy reduction in externally-funded on-budget resources to the sector. Health is worth 7.7 percent of the 2020 budget. Excluding financial operations and debt servicing, the sector represents 10.9 percent. As a share of the expected GDP for 2020, the Health Budget is worth approximately 2.5 percent. Relative to last year, the sector allocations decreased both as a share of government expenditure and as a share of GDP. 8. The Ministry of Health has developed a National Plan for COVID-19 preparedness and response which will be allocated approximately MT 1.8 b or USD 28.4 m through off-budget resources, of which 56 percent will be allocated to drugs and supplies. The Ministry of Health COVID-19 Plan however does not include budget for water services and hygiene measures essential to Infection prevention and control (IPC). 9. The 2020 initial allocation to Social Action dropped by 7 percent in nominal terms and by 14 percent in real terms compared to 2019. However, spending for INAS Social Protection Programs as a share of budget and as a share of GDP is on par with those of last year. Still, given the risk of increased vulnerabilities due to COVID-19, larger allocations to INAS programs are recommended.