– Economist Constantino Marrengula warns of risk to social sectors
By Noémia Mendes
Maputo (MOZTIMES) – The Economic and Social Plan and State Budget (PESOE) for 2025, approved on Saturday (10 May) by the Parliament, foresees total public expenditure of 512.749,09 million meticais, equivalent to 33.2% of Gross Domestic Product (GDP), and a budget deficit of 126.878,00 million meticais, or 8.2% of GDP. This marks a significant reduction compared to the figures approved for 2024.
Last year, public expenditure stood at 567.863,6 million meticais (37% of GDP), while the budget deficit reached 184.326,01 million meticais (12% of GDP).
Speaking to MOZTIMES, economist and university lecturer Constantino Marrengula noted that while the reduction of the deficit represents a positive step towards fiscal consolidation, its actual impact will depend on how it is implemented.
“The budget deficit reflects the gap between what the state collects and what it plans to spend,” Marrengula explained, warning that “it is implicit that part of the government’s planned objectives will rely on external financing or domestic borrowing, which could have side effects on the economy.”
State revenue for 2025 is expected to reach 358.871,8 million meticais, and according to Prime Minister Benvinda Levi, 90% of that figure will come from domestic sources.
Marrengula warned that “relying on domestic credit to finance the deficit may place upward pressure on interest rates and restrict access to credit for the private sector, especially affecting micro, small businesses and households.”
He noted that while external financing may ease pressure on domestic liquidity, it also carries risks. “External financing may help relieve pressure on domestic liquidity, but it increases public debt and debt servicing, implying future outflows of foreign currency and tying up resources that could otherwise be invested in productive sectors,” Marrengula said.
The economist also cautioned that reducing public spending and the deficit at the expense of public investment or social expenditure “may mean stagnation rather than progress".
The PESOE 2025 was approved with the support of Frelimo (in power) and PODEMOS (the second-largest parliamentary group), while Renamo and MDM voted against – signalling a new political alignment in Parliament. (NM)
