MOZAMBIQUE

Mozambique is a democratic republic with a unicameral parliament (the assembly of the Republic). The head of State and government is the president, directly elected through universal suffrage. The president may serve a maximum of two consecutive five-year terms. He appoints the prime minister and a council of ministers. The assembly of the Republic has 250 members, elected via universal suffrage to serve a five-year term. According to the current Constitution, adopted in 2004 and revised in 2007 and 2018, Mozambique is a unitary country guided by the principles of subsidiarity and descentralisation (Art. 8). Three levels of decentralised entities have been established: the provincial level (OGDPs for Órgãos de Governação Descentralizada Distrital), which comprises the governor, the provincial council and the provincial assembly; the district level (OGDDs for Órgãos de Governação Descentralizada Distrital) which comprises the district administrator, the district council and the district assembly; and the municipal level (local governments or authorities) which comprises the mayor, the municipal council and the municipal assembly.

Decentralisation was initially contemplated in Mozambique’s first Constitution of 1975, enacted by the Liberation Front (FRELIMO). It foresaw the creation of local governments, which would include representative bodies of elected citizens alongside the executive organs designated by legislation. These representative bodies would “organise the participation of citizens in the resolution of the problems of their communities and in the promotion of local development”. In the 1990 Constitution, new municipalities were created and the democratic rule of law based on political pluralism and the separation of powers was included. It also provided for municipal elections and a transformation of relations between levels of government (Art. 185). Local governments were further acknowledged by Constitutional Law nº 9/96, which introduced, for the first time, principles and provisions on local governments. The establishment of local authorities is supported by the legislative framework named Pacote Autárquico (local authorities’ package), composed of Law nº 2/97 (revised by Law nº 6/2018 and Law n 13/2018) and Laws nº 7 to 11 of 1997, establishing the administrative tutelage of the central government over local authorities, setting the legal framework for the finances and assets of local authorities and defining the special norms governing the municipality of Maputo. This resulted in the first local elections in 1998, involving 33 municipalities. The new constitutional provisions adopted in 2018 and the legislation passed thereafter (Acts n^o 3-7/2019, Act n^o 16/2019 and Decree n^o 2/2020) intend to strengthen the decentralisation process in relation to the architecture of the deconcentrated public administration and gave Maputo City a special statute. The state is represented in decentralised entities for the exercise of exclusive sovereign functions, under the terms defined by law (Art. 268). Mozambique’s current Constitution recognises the political autonomy of provinces in relation to the administrative bodies of the national government acting in their territory, although "decentralised governance must respect the government policy outlined at central level, within the unitary policy of the State” (n^o 1 and 2 of Art. 276). In this context, the council of ministers approved the law that establishes the framework for the representation of the State (Law n^o 7/2019) and the respective regulation (Decree n^o 63/2020).

Since the 2018 constitutional revision, mayors, provincial governors and district administrators are to be elected. Municipal elections were held on 10 October 2018 and the first elections of the provincial assemblies and governors (with the exception of Maputo City) were held on 15 October 2019, coinciding with the country's general elections. The government has set 11 October 2023 as the date for the next local elections. Act 7/2019 of 31 May establishes that until district elections are held in 2024, the central government will be responsible for defining the organisation and structure of district governments and creating district services based on the needs of each area.

The Ministry of State Administration and Public Service (MAEFP) is responsible for overseeing the implementation of laws governing local governments. Together with the MAEFP, the Ministry of Economy and Finance (MoF) is responsible for overseeing financial and fiscal procedures of local governments. Act 7/97 establishes the legal regime of the State’s administrative supervision over local authorities.

The National Association of Local Governments of Mozambique (ANAMM or Associação Nacional dos Municípios de Moçambique) was created in 2004 and represents all municipalities in Mozambique. The general objectives are promoting cooperation and solidarity among local authorities, dignifying and representing local governments and advocating the interests and rights of its members towards the central government, development partners and others. ANNAM has a privileged relationship with the government of Mozambique and with the ministries overseeing services and projects implemented within the boundaries of municipal territories.

TERRITORIAL ORGANISATION
MUNICIPAL LEVEL	INTERMEDIATE LEVEL	REGIONAL LEVEL	TOTAL NUMBER OF SNGs (2021)
53 municipalities (municípios)		10 provinces + the Capital City of Maputo (províncias)
Average municipal size: 589 725 inh.
53		11	64

OVERALL DESCRIPTION: Mozambique is a unitary country divided into 10 provinces and the Capital City of Maputo, 154 districts and 53 municipalities (autarquías). The Constitution states in Article 272 that “the provincial, district and local authority organs of decentralised governance are subject to the administrative supervision of the State“. Municipal units are classified either as cities or towns and their boundaries do not cover the whole territory. For administrative and electoral purposes, the deconcentrated districts in provinces are divided into administrative posts, localities and villages (povoações), municipalities are divided into municipal administrative posts and neighbourhoods (bairros) and in the case of Maputo, the capital city, it is divided in urban districts.

The 2003 Local Organs of the State Act, which is part of the legislative framework, specifies the roles and functions of the deconcentrated government bodies at the various territorial levels and their relations with local governments. It assigns functions to deconcentrated government bodies that sometimes overlap with those of decentralised government bodies.

Districts correspond to deconcentrated administrative entities. In the 2024 legislative elections, the head of the list of the party, group or coalition that obtains a majority of votes in the elections to the district assembly will become the first elected district administrators (Art. 283). Until then, a minister in charge of local administration at the MAEFP, in consultation with the governor of the province, appoints the permanent secretary, the director of district services, the head of the administrative post, the head of locality and the chief of village. The district assembly is the “democratically representative body elected by universal, direct, equal, secret, personal, periodic suffrage and whose term of office is five years in accordance with the principle of proportional representation”. It also approves the programme of the district executive council and monitors its implementation (Art. 282, Act n^o 1/2018). The district executive councils are composed of members of the district government (the district administrator, permanent secretary and service directors), together with the presidents of municipal councils, community authorities and representatives of economic, social and cultural organisations in the district.

REGIONAL LEVEL: The provincial level comprises 10 provinces and the capital city of Maputo. Provinces are led by a governor, the latter elected by the winning party in the legislative elections since 2019 and the central government is represented by the secretary of State and other specific services. The competences of the governor and the provincial executive council are stated in Act nº 4/2019 of 31 May 2019, which gives the legal framework for executive organs of decentralised provincial governance (Art. 45), together with its regulation, namely Decree nº 2/2020 of 8 January. Provincial assemblies are elected (Act n^o 5/2007 and Act nº 1/2018) but have little to no real authority over the functioning (or financing) of central government organs (secretary of State and council of the provincial services) within their province. The province is the largest territorial unit of the political, economic and social organisation of the country and it consists of districts, administrative posts, localities and villages. The provinces’ territories also integrate the area governed by local authorities.

The Nampula and Zambezia provinces present 20.6 and 18.5% of the country’s population respectively. The Niassa province has the largest territorial extension with an area of 129 056 km², followed by Zambezia and Tete provinces with 105 008 and 100 724 km² respectively (INE, 2019).

MUNICIPAL LEVEL: Municipalities correspond to the territorial jurisdiction of cities and towns, and villages correspond to the territorial jurisdiction of administrative posts. The country has 53 municipalities, after two reforms in the 2008 and 2013 municipal elections, each time adding 10 municipalities. Based on decree 51/2004; Resolution No. 7/87 of 25 April 1987 and Acta n 3/2008, there are four municipal categories among cities, each with their own administrative units and subdivided into municipal neighbourhoods. Municipalities of category A are divided by municipal districts. Maputo City is composed of seven municipal districts. The categories B (Matola, Nampula and Beira) and C (Chimoio, Nacala, Quelimane, Inhambane, Lichinga, Pemba, Tete, Xai-xai, Ilha de Moçambique) count with municipal administrative posts while category D (Angoche, Cuamba, Chibuto, Chókwè, Dondo, Gureé, Maxixe, Mocuba, Montepuez, etc.) covers villages that have municipal localities as administrative units. The administrative structure defined for municipalities is also asymmetrical: in category A municipalities, municipal services directorates are structured in municipal departments; in categories B and C, municipal departments are structured in municipal services; and finally, in category D, municipal services are structured in municipal sections.

The six largest cities in Mozambique are Maputo, Matola, Nampula, Beira, Quelimane and Chimoio. Due to the country's geographical location on the coast of southern Africa (bathed by the Indian ocean except Chimoio), the economic activity of these municipalities is fundamentally based on agriculture, tourism, livestock, fishing, commerce and industry. Maputo City municipality shows a population density of around 3 245 inh/km² based on data from INE (2020 census) for a total population of around 1.12 million inhabitants. The second city of Mozambique, Matola, has a total population of 1.03 million, Nampula city has 760 214 inhabitants, Beira municipality counts 592 090 inhabitants and the municipality of the City of Chimoio has a population of 363 336, which has increased to around 456 775 inhabitants based on data from INE 2021.

The municipal assembly, endowed with deliberative powers, consists of members elected by universal, direct, equal, secret, personal and periodic suffrage of the voters residing in the territory of the local authority for a five-year term, under a system of proportional representation (Art. 30 of Act n 13/2018 of 17 December). The head of the list that obtains a majority of votes in the elections for the municipal assembly becomes president of the municipal council (Art. 289 of the Constitution). This president then appoints the municipal council’s members. The president may be dismissed by the respective regional assembly and by the supervisory organ of the central government (Art. 289 of the Constitution). Since the 2019 general elections, the mayor, who is the municipality’s single head executive, is elected indirectly from among the municipal councillors. The competences of the municipal assembly, the municipal council and its president are stated in Act nº 2/97 of 18 February, which was amended by Law nº 6/2018 of 3 August and published again through Law nº 13/2018 of 17 December alongside the latest constitutional revision.

Municipalities exercise their responsibilities under the supervision of the local organs of the central government (at provincial or district levels according to Act 8/2003). Local authorities aim to guarantee the fulfilment of economic, social and cultural tasks and programs of local and national interest (Art. 8, Act nº 2/97). General functions of municipalities include (i) maintenance of peace, order, and good government, (ii) social welfare and economic wellbeing, (iii) social and economic development in line with national policies, (iv) regulation and improvement of agriculture, trade, commerce and industry, (v) furtherance and enhancement of the health, education and social, cultural and recreational life of the people, and (vi) relief of poverty and distress. In addition, administrative and financially autonomous bodies managed in an entrepreneurial manner are in place to address certain collective needs (e.g., the Fund for Investment and Assets of Water Supply, or FIPAG for Fundo de Investimento e Património do Abastecimento de Água).

Main responsibility sectors and sub-sectors
SECTORS AND SUB-SECTORS	Regional level	Municipal level
1. General public services (administration)	Administration and operation of general services	Gardens and nurseries; cemeteries and crematoria; service facilities; markets and fairs; energy (distribution of electrical energy and public, urban and rural lighting)
2. Public order and safety	Fire protection and civil protection (shared with national government)	Traffic lights; firefighters; municipal police
3. Economic affairs / transports	Tourism, folklore, crafts and local fairs (shared with municipalities); trade and industry (shared); roads and bridges that correspond to local, district and provincial interest; agriculture, fisheries, silviculture, livestock, food and nutrition security; electricity and gas services	Local economic development; local trade and industry (shared); tourism (shared with provinces); public transport, urban and rural roads network; road management, including sidewalks
4. Environment protection	Land and environmental management and protection; forests, wildlife and conservation areas	Environmental management (protection or restoration of the environment; afforestation, planting and conservation of trees; establishment of municipal reserves
5. Housing and community amenities	Regional and town planning and organisation	Affordable housing; housing management and construction; water supply; street lighting
6. Health	Primary care and maintenance of hospitals (shared with national government)
7. Culture & Recreation	Promotion of cultural activities (theatre and concerts); maintenance of museum and libraries; sport promotion	Houses of culture, libraries and museums; cultural, landscape and urban heritage; campsites; facilities and equipment for sports and recreation
8. Education	Primary education, general education and vocational, technical and adult education (shared with national government)	Pre-school education centres;schools for primary education; school transport; equipment for basic adult education; other activities complementary to the educational action (in the fields of social, school and leisure activities)
9. Social Welfare	WASH (shared with central and local government); preventing and combating natural disasters	Municipal water supply systems; sewage systems; garbage collection and treatment systems and public cleaning; support activity for population groups - vulnerable and social housing

Scope of fiscal data: provinces and municipalities

SNA 2008

Availability of fiscal data: Low

Quality/reliability of fiscal data: Medium

GENERAL INTRODUCTION: The Act nº 16/2019 of 24 September approved by the Mozambican State defines the financial and patrimonial regime of the organs of provincial decentralised governance alongside its regulation Decree nº 95/2020 of 2 November. Despite the provincial level having benefited from an amplification of its tax base, the public sector revenue in Mozambique still remains highly centralised. The government’s objectives for fiscal decentralisation are derived from the policy paper on local government reform of 1997 and Act nº 8/2003, which aim at enhancing the efficient management of both locally generated and centrally disbursed financial resources. Act nº 1/08 of 16 January 2008, which repealed the original Act nº 11/97 of 31 May, redefined the financial and budgetary regimes of the municipalities.

Law nº 9/2002 of 12 February that created the State Financial Administration System (SISTAFE for Sistema de Administração Financeira do Estado) was revised by Law nº 14/2020 of 23 December as a consequence of the reforms underway in the country. The respective regulation (Decree nº 23/2004 of 20 August) was revoked by Decree nº 26/2021 of 3 May. These instruments are applied to all government bodies and institutions, including local authorities. The “e-SISTAFE Autárquico”, a component of the municipal management system or SGA (acronym for Sistema de Gestão Autárquica), started in February 2019 as a joint project between the MoF and MAEFP, the ANAMM and the Centre for the Development of Information Systems for Finance (CEDSIF), with the objective of developing and implementing an integrated municipal management system.

According to the 2020 general government financial accounts (CGE for Conta Geral do Estado), “the necessary conditions for the integration of Phase II of e-SISTAFE Autárquico have been fulfilled in five local governments and the expansion of activities has been finalised in 13 more. These municipalities have entered their budgets into the system and will begin implementation in 2021”. The document mentions that the necessary maintenance and improvements are being made for the full functioning of the system and the preparation of the budgets of the pilot municipalities for 2021 (that include Maputo, Matola and Boane). In the last quarter of 2020, a simplified process for the payment of salaries through the collective payment requisition (RPC for Requisição de Pagamento Colectivo) via e-SISTAFE Autárquico was also set up.

Subnational government expenditure by economic classification
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total expenditure	60	4.6%	12.8%	100.0%
Inc. current expenditure	47	3.6%	15.5%	77.4%
Compensation of employees	28	2.2%	17.2%	47.3%
Intermediate consumption	7	0.6%	14.1%	12.2%
Social expenditure	10	0.8%	24.2%	17.3%
Subsidies and current transfers	-	-	-	-
Financial charges	0.1	0.0%	0.2%	0.1%
Others	0.3	0.02%	50.7%	0.5%
Incl. capital expenditure	14	1.1%	13.0%	22.6%
Capital transfers	14	1.1%	23.1%	22.6%
Direct investment (or GFCF)	-	-	-	-

EXPENDITURE: Subnational spending in Mozambique, which encompasses provincial and municipal levels, is at USD 47 PPP/inh., 4.6% of GDP and 12.8% of public expenditure in 2020. Of that total amount, 77.4% is allocated to recurrent expenditure and 22.6% to capital expenditure. Staff expenditure benefits from the largest share of the budget with 47.3% of the total execution, which represents 2.2% of the GDP. Municipalities account for 10.7% of the subnational expenditure, while provinces take up most of the yearly expenditure realised by decentralised governments.

DIRECT INVESTMENT: Investment programs at subnational level are financed by central government transfers. The provincial level takes up 70% and the municipal level 30% of subnational investment, which overall represents 13% of public investment. Central government allocations for subnational investment programs are often unduly reoriented and used by municipalities to pay salaries (recurrent expenditures).

ⓘ No detailed data available for this country

Subnational government revenue by category
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total revenue	19	1.4%	5.9%	100.0%
Tax revenue	6	0.5%	2.1%	33.1%
Grants and subsidies	6	0.5%	11.8%	34.7%
Tariffs and fees	1	0.1%	0.9%	3.8%
Income from assets	5	0.4%	5.7%	25.5%
Other revenues	1	0.04%	1.7%	3.0%

OVERALL DESCRIPTION: As established in the State Local Organs Act 8/2003, the financing of a large majority of spending at provincial and district levels is based on (1) budgetary transfers coming from central funds to finance current and capital expenditures, (2) shares of central fiscal revenues assigned to provincial and district levels, and (3) donations from private NGOs and from bilateral or multilateral international cooperation. The 2008 fiscal reform restructured the conditional grants which fund most subnational spending by reducing conditionality (i.e. with the introduction of “block grants”). It also reduced the transfers from the central government to municipalities (through the municipal compensation fund) from 3 to 1.5% of total public revenue. In return, it has conceded to municipalities both fiscal (concession of land use rights, ability to raise property and vehicle tax) and non-fiscal (economic and market activities and user fees) revenue sources.

There are revenue asymmetries between municipalities due to several factors determined by Law 20/18 of 1 January (Autarchic Finance Law). For example, regarding the central government transfers – the municipal compensation fund (FCA for Fundo de Compensação Autárquica) is calculated based on the total number of inhabitants of the municipality.

In 2020, subnational government revenues were of USD 19 PPP/inhabitants, 1.4% of GDP and 5.9% of public revenues, of which municipalities represented 78.2% and provinces 21.8%.

TAX REVENUE: According to the fiscal reform of 2008 (Chapter IV, Act 1/ 2008 on Municipal Finances and Decree 63/2008, Municipal Tax Code), local taxes include the tax on immovable property transactions (SISA), property tax, vehicle tax and municipal personal tax (IPA). The IPA (Imposto Pessoal Autárquico) is calculated considering categories of municipalities: A (4%), B (3%), C (2%) and D (1%). However, municipalities have limited capacity to collect tax revenue as budgeted. For the year 2020, the taxes collected by subnational governments were of 2.1% of total taxes collected in the country. They were the second largest source of revenue at the subnational level, corresponding to 33.1% of total revenue, equivalent to 0.5% of GDP.

By law, municipalities and provinces (the latter since 2020) receive a share of national taxes. These include the tourism tax, which is collected by local businesses, vehicle taxes and some income taxes for people working locally. According to the Commonwealth Local Government Forum, the amounts of the tourism tax and the vehicle tax transferred to municipalities represent 30% and 75% of the corresponding tax revenues of the general government respectively.

GRANTS AND SUBSIDIES: In Mozambique, the "financing follows function" principle is enshrined in the legislative framework of municipal finance (Chapter III, Law nª1/2008). Direct transfers from central government to municipalities come from (i) the municipal compensation fund (FCA); (ii) sectoral funds and (iii) the local initiative investment fund (FIIL for Fundo de Investimento de Iniciativa Autárquica). The transfers from FCA and FIIL are established in the annual budget of national government and take the form of recurrent and capital grants based on a formula. The formula is published in the annual budget and takes into account (i) the surface area of the local government, (ii) the population, (iii) the level of development and (iv) the performance in collecting taxes. Provincial capital cities also receive the urban poverty reduction fund (PERPU). In some cases, municipalities also receive funds through development cooperation. Considering that all of the grants are transferred from the central government to the municipal level, it is important to note that for this lowest level of government, grants represent 44.4% of the revenue, this being their principal source of revenue (followed closely by tax revenue at 41.9%).

OTHER REVENUES: In 2020, income from assets corresponded to 25.5% of the total subnational revenue collected, which is equivalent to 0.4% of GDP.

ⓘ No detailed data available for this country

FISCAL RULES: The State Financial Management System (SISTAFE) was established in 2002 by Act 9/2002 and approved in 2004 by Decree nº 23/2004, as an integrated set of budgetary principles and rules with the aim to establish and harmonise the procedures for programming, management, execution and control of the public treasury. This set of rules is divided into five subsystems, namely State budget, public accounting, public treasury, State heritage and internal control. Within the scope of the reforms carried out by the MoF to the planning and budget subsystem (SPO), Act nº 14/2020 of 23 December modified the SISTAFE. This act establishes the following six subsystems: planning and budgeting; public accounting; public treasury; State heritage; monitoring and evaluation and internal audit. In this review, the previous State budget subsystem was replaced by the planning and budgeting subsystem, internal control was replaced by the internal audit subsystem and monitoring and evaluation was added as a new subsystem.

The ongoing reform of the planning and budget subsystem (SPO) aims to (i) integrate the economic and social plan (PES) and the State budget (OE) into a single result oriented instrument called the economic social plan and the State budget (PESOE); (ii) organise national plans (central and local) into programs; (iii) ensure management by results and greater relevance, efficiency and effectiveness in public spending; (iv) improve performance in the management of public administration, defining responsibility at different levels; and (v) provide timely information for internal and external control actions to take place. The SISTAFE revision law introduced financial offences, fraud and sanctions, as well as a system of accountability and sanctioning measures for public employees and agents who do not comply with the rules and procedures. The legislation sets penalties of effective imprisonment for the practice of fraud related to e-SISTAFE. All these rules and procedures apply to the organs and institutions of the central government and are extended to decentralised entities, which include provincial governance bodies and local authorities (municipalities).

DEBT: Municipalities may borrow with the approval of the Ministry of Economy and Finance although borrowing is indeed considered as an “extraordinary” scenario (Art. 18, Act nº 1/2008), which only applies in three cases: a) reproductive investments (municipalities may contract credit loans with clear intention to generate wealth and wellbeing of its citizens through lending to single individuals) and investments of social or cultural character, b) coverage of extraordinary expenses necessary to compensate losses incurred in the event of a public disaster, and c) coverage of the needs of local authorities for financial recovery, following the execution of a previously concluded financial rebalancing agreement.

Short-term loans (Art. 19) from national financial institutions are authorised to deal with occasional cash-flow difficulties. However, recourse to bank credit must meet two criteria: the amount must not exceed one-fourth of the transfers received from the FCA (municipal compensation fund) and the debt shall be written off at the end of the respective fiscal year. Loans can also be contracted by autonomous institutions (for example public companies). Local public companies can resort to credit under the terms of special regulations to be established by government decree.

TERRITORIAL MANAGEMENT OF THE CRISIS: With the outbreak of the COVID-19 pandemic and the appearance of the first case in Mozambique on 22 March 2020, several measures were adopted by the government through decrees to mitigate the effects of the disease. These presidential decrees were applied across the country at the provincial, district and municipal levels. They had a direct impact on all sectors, with a focus on education, health, social welfare and the economic sector (MoF, 2022, p. 3). The measures implied restrictions of internal movement in the national territory, social distancing, partial closure of borders, closure of schools, adequacy of health infrastructure for infected patients, limitation of business and working hours, among others. On 5 February 2021, the Greater Maputo metropolitan area (Maputo and Matola cities and the Marracuene and Boane towns) and all provincial capital municipalities were put on a curfew for an extendable period of one month due to their high level of infected inhabitants. The easing of restrictions in Mozambique was announced by the president in September 2021.

The management of the pandemic is done with interactions between central and decentralised governments. This coordinated and joint approach allows for the sensitisation of citizens at the local level to ease the adoption of prevention measures against COVID-19, such as the use of masks in public places and agglomerations. An integrated approach between public institutions in the management of COVID-19 is notable between the various ministries as well as in the cooperation with local governments, especially municipalities, which have played a decisive role in this process. The aforementioned presidential decrees provide for the collaboration of local bodies in monitoring compliance with the measures within their areas of operation, such as the mandatory wearing of masks or visors in public places and agglomerations including markets. Paragraph 3 of Article 23 of Decree 79/2020 of 4 September states that "local bodies should reorganise the markets, creating conditions for compliance with the measures to prevent and combat the COVID-19 pandemic". The requalification of municipal markets and the supervision of informal trade are a clear example of the municipalities' efforts to contain the spread of the COVID-19 pandemic. Municipalities also played an important role in the enforcement of measures related to the supervision of public transport within their territory.

EMERGENCY MEASURES TO COPE WITH THE CRISIS AT THE DIFFERENT LEVELS OF GOVERNMENT: To reduce the impact of the pandemic at central and subnational levels, the Mozambican government set up a social protection response plan and the National Pandemic Preparedness and Response Plan COVID-19 covering health, education, public works, access to water, energy and agriculture. The basic social assistance programmes were adjusted to mitigate the negative socio-economic impacts on the vulnerable population.

The National Investment Bank (BNI) allocated MZN 1 000 million to guarantee financing for small and medium enterprises. In July 2020, the BNI proceeded with the launch of a line of credit "Gov. COVID-19". Another credit line of MZN 600 million called "BNI COVID-19" was financed by INAS (National Institute of Social Action) funds. Thus, the total value of the credit lines was MZN 1 600 million and the BNI received 1 058 project proposals of which 224 were approved.

With the outbreak and spread of COVID-19, the government’s main economic policy objectives were revised from 2.2 to 0.8% for GDP growth and from 6.6 to 4.0% for the average annual inflation. In this context, the monetary policy committee of the Mozambique Central Bank, decided to reduce the MIMO (Mozambique Interbank Market Rate) interest rate by 250 basis points between April and June 2020, which was reflected in the fall of the prime rate and the consequent slowdown in the cost of financing. In addition to this measure, the Central Bank reduced the mandatory reserve ratios in national and foreign currency as well as the required reserve coefficients in domestic and foreign currency, which allowed the release of MZN 4.5 billion, available to the banks to finance the economy.

IMPACTS OF THE CRISIS ON SUBNATIONAL GOVERNMENT FINANCE: The 2020 CGE approved in 22 April was drafted at a time when the evaluation of the effects of COVID-19 was very preliminary. In order to safeguard budgetary sustainability and correct fiscal imbalances, the General State Budget was revised by Law nº 11/2020 of 24 November as follows: (1) reduction of general government revenues due to the change in macroeconomic assumptions and the fiscal and customs measures approved to mitigate the impact of pandemic; (2) upward adjustment of external funding due to the commitments made by cooperation partners to support the prevention and fight against COVID-19; (3) upward adjustment in subsidies to companies and current transfers to families; and (4) strengthening the education, health, water, energy, agriculture, transport, social protection and defence and security sectors.

In order to operationalise these plans and COVID-19 response measures, the government mobilised resources from its cooperation partners, namely the International Monetary Fund (IMF), African Development Bank (ADB), Islamic Development Bank (IsDB), World Bank (WB), European Union (EU), the US government and the Global Fund, with needs estimated at around USD 700 million. According to the MoF, MZN 23 756 million were disbursed by the partners in 2020 through the Single Treasury Account (STA), and MZN 20 667 billion were transferred to the sectors and executed.

Law nº 11/2020 of 24 November led the government to allocate MZN 433 million to the municipal compensation fund (FCA) of 19 municipalities, to deal with the fall in tax revenues. The limited tax base at local level and the pandemic reinforced the municipalities’ dependence on central government transfers, namely the FCA, the local initiative investment fund (FIIL) and the road fund (FE for Fundo de Estrada) and made difficult the implementation of local governance plans and improving public service delivery. In this context, local governments rely on partnerships with private agents and financial institutions to counter the pandemic, such as the German Development Bank (KfW). Activities in several municipalities have been financed by this important bilateral cooperation strategic partner through the integrated development programme for municipalities and surrounding rural areas (PRODIA). This project’s objective is to enable municipalities to provide sustainable urban services for urban, peri-urban and rural populations, in order to reduce poverty.

ECONOMIC AND SOCIAL STIMULUS PLANS: No information is available on the national economic and social stimulus plans nor the local government involvement in them.