Mozambique’s parliament on Monday approved, in general terms, the proposed revised law on the State Budget for 2016, which reduces previously planned spending and lowers the forecast rate of economic growth, local media reported.

The expenditure included in the draft law totals 243 billion meticais (US$3.6 billion), which compares with 246 billion meticais included in the first State Budget for the current year.

The document presented to the House by the Minister of Economy and Finance, Adriano Maleiane, setting the budget deficit at 77.8 billion meticais (US$1.161 billion), which should be covered with internal and external resources.

The new macroeconomic scenario in the new budget lowers the growth forecast for the Mozambican economy from 7.0% to 4.5% in 2016 and revises forecast inflation upwards from 5.6% to 16.7%.

The document also indicates that net foreign reserves will be reduced from US$2.3 billion in the state budget adopted in December 2015 to US$1.2 billion and the value of exports will contract by US$3.6 billion to US$3.2 billion.

The new budget now approved in general does not include the impact of the State guarantees granted to Mozambique Asset Management and Proindicus, which took on loans amounting to US$1.2 billion, “as they are not expected to be executed by the creditors,” according to Mozambican news agency AIM. (macauhub/MZ)