MAPUTO, Dec 21 (Reuters) - Mozambique's parliament has approved a 5 percent increase in the 2009 annual budget to $4 billion as it boosts spending on education, health and infrastructure.
The southern African country will need to make up a 55 percent budget shortfall with tax increases as well as grants and soft loans from international partners, it said.
The budget was approved late on Saturday.
The government said tackling poverty was the top priority and spending would go mainly on education, health, infrastructure, agriculture, governance and public order.
A big chunk of money was earmarked for the recruitment of teachers, heath workers and police.
"The main goal of this budget is to reduce the percentage of people living in extreme poverty who are facing hunger, and to create decent employment for everyone," Prime Minister Luisa Diogo told parliament.
Mozambique, which has a population of about 20 million, aims to reduce poverty to 40 percent in 2015 from 45 percent now.
African countries such as Mozambique have been struggling with higher international food and fuel prices, which have eaten into already stretched government budgets.
Mozambique, one of the poorest nations on the continent, is battling to find the money to rebuild its dilapidated education and health-care system as well its road network, which was neglected during a 17-year civil war that ended in 1992.
Mozambique has had one of Africa's fastest growing economies in the region over the past decade but still relies heavily on donor aid. The government expects growth to slow to 6.7 percent in 2009 from a forecast 8 percent in 2008. (Reporting by Charles Mangwiro; Editing by Tomasz Janowski)