Child Poverty in Mozambique. A Situation and Trend ... - Unicef

ANNEX IV
State Budget recurrent and investment expenditures
The State Financial Administration System (SISTAFE) Law provides the legal basis
for budgeting in Mozambique. 87 It clearly states that there is only a single, centrally
approved State Budget, approved by Parliament each year. However, that budget
is divided into two sections: recurrent expenditures (known as despesas correntes
or despesas de funcionamento) and investment expenditures (despesas de
investimento). The former section contains routine expenditures relating to ongoing
operating costs. It is in turn broken down into salaries (despesas com o pessoal),
goods and services (bens e serviços), debt service payments (encargos de divida),
recurrent transfers (transferências corentes), subsidies (subsídios) and other current
expenditures (outras despesas corentes). The recurrent expenditures are financed by
“internal” funds (componente interna). Internal financing is predominantly made up
of Government revenues, although it also includes aid in the form of General Budget
Support (GBS), which is merged with revenues in the Single Treasury Account (Conta
Única do Tesouro). 88
As regards the investment expenditures section, it should be noted that it is not
exclusively limited to expenditures on physical capital (i.e. those which lead to the
creation of physical assets which can be used over a period of several years) - it also
includes recurrent items such as salaries and goods and services. Thus, it should not
be thought of purely as a “capital budget”, though it does contain most capital and
most non-routine expenditure. Thus, the investment expenditures section might,
contrary to its name, be better thought of as a “project budget”, where a “project”
is defined as an amount of money, for a more or less clearly defined purpose, that
is protected and which can be tracked (Orlowski, 2005). The fact that funds in the
investment expenditures section are ring-fenced and more easily tracked means
that all donor funded “externally” financed (componente externa) projects are
included in the investment budget, even if they are of a recurrent nature (provision
of textbooks and medicines being good examples). The investment expenditures
section is not entirely financed externally though, and also includes projects wholly or
partially covered by internal financing. It is still possible to distinguish capital-related
expenditures within the budget since both the recurrent and investment sections of
the budget are classified by type of expenditure (classificação económica).
87 Law nº 9/2002, of 12th February, approves the State Financial Administration System (Sistema de Administração Financeira do Estado, or the
“SISTAFE”) and Decree nº 23/2004, of 20th August, approves the SISTAFE Regulations.
88 GBS is defined as aid paid to the Treasury which is not earmarked for any particular sector or project. It should not be confused with Direct
Budget Support (DBS), which defines any money paid directly to the Treasury going straight into the budget, whether for GBS or for a specific
sector.
226 CHILDHOOD POVERTY IN MOZAMBIQUE: A SITUATION AND TRENDS ANALYSIS