EIU projects Mozambique budget deficit of 8 pct in 2015

29 May 2015

Efforts by the Mozambican authorities to contain public expenditure in 2015 are expected to lead to a drop of 2.8 percentage points in the budget deficit to 8 percent of gross domestic product (GDP), said the Economist Intelligence Unit (EIU) in its latest report on Mozambique.

After reaching 10.8 percent of gross domestic product (GDP) in 2014, the budget deficit will fall by almost three percentage points, reflecting a reduction in expenditure by the State of 9.8 percent, said the EIU.

Reflecting the “effort made by the authorities for budget deficit containment,” but with reservations regarding the target of 7.4 percent of GDP outlined in the State Budget (OGE), the EIU revised its forecast from 8.2 percent to 8 percent of GDP in its macroeconomic update for the month of May and to which Macauhub had access.

Along with this review, the EIU also lowered its GDP growth forecast from 7.2 percent to 7 percent and is now in line with forecasts from the International Monetary Fund (IMF), but 0.5 percentage points below the target set by the government of Mozambique.

The annual average inflation forecast for 2015 was changed from 3.7 percent to 3.4 percent, or 1.1 percentage points higher than recorded last year (2.3 percent), but within the range forecast by the Mozambican authorities, who expect it to be around 5 percent.

Due to a reduced oil import bill, the current account deficit will decrease from 36.1 percent of GDP in 2014 to 33.2 percent of GDP in 2015, with public debt standing at 56.1 percent of GDP, the EIU projected. (macauhub/MZ)