On May 4th , 2021, the President of the Republic, Francisco Guterres Lú Olo, promulgated the Revised General State Budget Law (GSB). This first amendment to Law 14/2020, the 2021 State Budget Law, was promulgated by the Head of State, after final overall appreciation and approval by the National Parliament, with 44 votes in favour (68%).
With the promulgation of this law of the Revised General State Budget, some changes in budget allocations are introduced. For example, the Central Administration Budget was increased with USD$ 135,300,000.00, which now totals USD$ 1,932,543,312.00. This amount of USD$ 135,300,000.00 corresponds to an increase in expenses, and will be covered by an increase in revenues.
The allocation of the COVID-19 Fund, which had an initial amount of 31,000,000.00 USD, was reinforced with an amount of 256,641,793.00 USD and now totals 287,641,793.00 USD. The reinforcement of the COVID-19 Fund allocation is done through the reallocation of part of the Infrastructure Fund (IF) budget allocations and the Whole of Government allocation.
Consequently, the IF allocation also changed. From the initial amount of USD 339,604,554.00, it decreased to USD 280,891,554.00 due to the reinforcement of USD 58,713,000.00 in the COVID-19 Fund allocation. Finally, the Contingency Fund allocation, which previously had an amount of 23,763,372.00 USD, was reinforced with 41,388,428.00 USD, reaching now the amount of 65,151,800.00 USD.
These budget allocation amendments resulted from some “financial engineering” that the Government carried out to avoid making further withdrawals from the Petroleum Fund. During the Generality Debate of the Revised Budget, in the National Parliament last month, the Minister of Finance, Rui Gomes stressed that “this is an important moment and a difficult moment for any Government. Our only solution is to strengthen fiscal and budgetary policy. That is what this Government is trying to do.”
With this promulgation, by the Head of State, the amendment to the allocation of the COVID-19 Fund will enable the Government to allocate USD$34.5 million to purchase sufficient COVID-19 vaccines to immunise the entire population, to purchase personal protective materials and equipment and material for testing and treatment for inpatient COVID-19 patients, the construction and rental of isolation and quarantine spaces and the improvement of isolation sites throughout the territory.
Moreover, with this amendment in the allocation of COVID-19 Fund, the Government also has the opportunity to fund socio-economic measures, such as employment support (USD$45.3 million), credit moratoria (USD$2 million), tuition fee exemption for higher education students (USD$14 million) and internet subsidy for higher education students (USD$2, 2 million), the purchase of food products from local producers (USD$ 12 million), the subsidy for electricity, the financing of the operation of the Integrated Centre for Crisis Management with (USD$ 16.7 million), the salary supplement for front line workers (USD$ 1.9 million), and the extension of the Basic Food Basket programme (USD$ 31 million).
The Reinforcement of the allocation of the COVID-19 Fund allows the Government to continue the actions to prevent and combat COVID-19 and to calm the social and economic situation of companies, workers and families. In addition, with the amendment to the allocation of the Contingency Fund, the Government still has budgetary margin to address the needs of communities that were most affected by the recent flooding disaster.
The Ministry of Finance would also like to add that, according to Government Decree No. 1/2017 of January 9th, related to the Execution of the 2017 State General Budget – as of that year, seventy-five percent (75%) of the budget execution process is decentralized to ministerial lines. It is only twenty-five percent (25%) of the budget execution process that has the participation and involvement of the Ministry of Finance. Therefore, each of the ministerial lines should execute its budget, according to the approved program and activities, to contribute to the growth of the national economy.
Regarding Autonomous Agencies and Municipalities, the budget execution process is 100% decentralised, which means that Autonomous Agencies and Municipalities make all payments directly to bank accounts of the beneficiaries, except for salaries and wages.