Expenditure coverage and tracking. We made progress in the coverage of the integrated financial management system (e-SISTAFE). By end-August 2015 the share of expenditures paid through e-SISTAFE directly to the beneficiary reached 70.7 percent of total spending from the target of 70 percent for 2015. Coverage is expected to reach 75 percent in 2016.  

 




Real time registration of commitments. The reform is expected to allow greater control of budget execution through greater efficiency in the use of e-SISTAFE. We implemented the procedures set out in the Ministerial Diploma No 210/2014, of December 9, for wage processing and payment to all civil servants and State Agents observing the three stages of expenditure execution in June 2015. We are conducting training and awareness campaigns for the users of e-SISTAFE to facilitate the implementation of the mandatory real-time recording of the commitment and verification of expenditures for all units operating within e-SISTAFE by end June 2016 (Structural benchmark).. 

 

Wage bill management. We remain committed to expanding the e-Folha to all State agencies and institutions that have e-SISTAFE. By end-September 2015, from the total of  302,800 civil servants and State agents registered in e-CAF, 270,612 had their wages and salaries processed and paid by e-Folha, which corresponds to 89.3%. From July to September 2015 we carried out 245,607 proof of life in the country, corresponding to 81.1% of civil servants and State agents registered in e-CAF. 

 

Cash management. We remain committed to extending the use of the treasury single account (CUT). A new Budget Circular was issued in November 2015 to ensure that all revenues are transferred into the CUT, including own revenues of budgetary institutions.  

Scope of the public sector. The revision of the SISTAFE Law which is expected to take place by December 2016 will broaden the scope of the public sector and make it consistent with international standards. In addition, a new law defining the statute of public funds and autonomous entities has been drafted and is under revision and expected to be submitted to Cabinet by May 2016. 

Fiscal risk management. The National Directorate of Economic and Financial Studies was established in the new structure of the Ministry of Economy and Finance. The Directorate incorporates a fiscal risk management unit and will be responsible to deal with all fiscal risk related matters. We drafted the initial statement of fiscal risks with IMF technical assistance, and published it on the website of MEF in November 2015 (4th review structural benchmark for October 2015).


We remain committed to implement the recommendations of the 2014 fiscal transparency evaluation report with technical assistance from the IMF.  

 

Fiscal rule for windfall revenue. Large and regular influx of natural resource revenue from LNG is expected to start in a decade. To ensure the use of these resources only for public investment, debt repayment, and national emergencies2, the above fiscal rule will be included in the 2016 budget law. We intend to develop a medium-term fiscal framework and a formal fiscal rule to (i) inform future saving and investment decisions, (ii) manage volatility, and (iii) address exhaustibility concerns before significant natural resource revenues materialize.   

 

Public Expenditure and Financial Accountability (PEFA). We carried out the PEFA evaluation this year based on the current PEFA methodology using information over the period 2012-2014 and comparing the results with the 2011 last PEFA exercise. The main findings of the report suggested that Mozambique is being successful in consolidating progress achieved on PFM reforms since 2010, particularly in the areas of budget execution, accounting, e-SISTAFE system coverage, reporting and internal and external audit. At the same time, the report recommended improvements, especially in the area of public procurement. 


VAT administration. The 2015 budget projected VAT revenues on a net basis. In addition, VAT arrears from previous budget years amounting to 8.2 billion Mt were securitized. These were two key components of the VAT reform. However, implementation of the net VAT system has encountered some difficulties, which have led to the accumulation of new arrears projected at 6.5-7 billion Mt by end-2015, of which part are claims from years before 2015. To prevent these problems in the execution of the 2016 budget, we will create in the TSA a dedicated subaccount to pay VAT refunds, by end-December 2015. 



This account will be regularly replenished by an amount equivalent to the amount of claims received. In addition, to compute. In case of temporary severe cash constraints generated by unexpected shortfalls in budget support, windfall deposits could be used on a temporary basis. 

  

Implementation of e-Tax. The registration of taxpayers into the new electronic system advanced considerably, reaching so far 76 percent of all VAT taxpayers more than the 65 percent of the target for end-December 2015. 


Progress was registered towards the launch of the online taxpayers’ portal connected to e-tax, which is expected to be fully operational by end-2015.  

 

Tax payment through banks. We made progress to facilitate tax payments through banks by developing an IT application and signing agreements with 13 commercial banks.