(2020-2021) MEF Budget Launch Meeting: Macroeconomic Context and Government Commitments for the 2020-2021 Budget
Summary — A Ministry of Economy and Finance (MEF) presentation launching preparation of the 2020-2021 budget, covering the COVID-19-driven macroeconomic outlook, the Staff Monitored Programme (SMP) with the IMF, and prior-year spending commitments that must be carried into the new budget.
Key Findings
- The 2020-2021 budget must legally be adopted by 30 September 2020 and, per the IMF SMP, published before 1 October 2020. COVID-19 drove a projected 3.6% economic contraction, roughly 22.6% average annual inflation, and gourde depreciation to 116.72 per US dollar by late June 2020. Prior-year commitments needing annualization include coverage for over 10,000 MENFP staff, seven months of PNH pay arrears, and unresolved MSPP salary arrears, alongside declining domestic petroleum revenue and shrinking external budget support.
Full Description
This MEF presentation, delivered to launch preparation of the 2020-2021 national budget, sets out the legal deadline for adopting the budget (30 September 2020, under the principle of budgetary anteriority) and the related IMF Staff Monitored Programme (SMP) structural benchmark requiring the budget to be adopted and published before 1 October 2020. It describes progressive implementation of the 4 May 2016 law (replacing the 16 February 2005 decree) on the preparation and execution of finance laws, including expansion of program-budgeting to a minimum of five additional ministries. The macroeconomic backdrop is dominated by COVID-19: the economy is projected to contract by 3.6% in fiscal year 2019-2020, inflation is running at roughly 22.6% average annual and 24% year-on-year, and the gourde depreciated by 1.7%, 3.1%, and 3.4% in February, March, and April 2020 respectively, reaching 116.72 gourdes per US dollar by 24 June 2020. The document also lists falling exports, declining domestic resources (including petroleum revenue lost through non-adjustment of pump prices), and scarcer external budget support despite ongoing IMF negotiations and structural reforms. It flags carried-over commitments to be annualized in the new budget, including provisions for more than 10,000 MENFP teachers and administrative staff for the remaining three months of 2019-2020, seven months of pay owed to the 30th PNH promotion plus salary arrears for the 29th promotion, a partially funded COVID-19 preparedness and response plan, and salary arrears owed to MSPP personnel. Other pending items cited include diplomatic mission costs amid currency depreciation, stalled infrastructure projects (Hopital SIMBI Continental, Marche Fontamara), debt service and arrears rescheduling, election financing, and financing of the National Social Protection Program. Sectors are invited to submit spending proposals to MEF and the Ministry of Planning and External Cooperation once the Prime Minister's budget circular letter is received.