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IMF: “Wage Restraint is Key to More Public Investment”

IMF: “Wage Restraint is Key to More Public Investment”

The representative of the International Monetary Fund (IMF) in Mozambique, Alexis Mayer-Cirkel, considered it essential to reform spending on public administration salaries in the country in order to free up the resources needed for investment in the social and infrastructure sectors.

“Salary reform is important because public resources are scarce and when they are excessively absorbed by salaries they are not available for sectors such as education and infrastructure,” she said.

Speaking in Maputo during a seminar with deputies from the Assembly of the Republic’s Planning and Budget Committee, the official explained that what is important for economic growth is investment, while the payroll is current expenditure, maintaining that “Mozambique experienced a very large fiscal shock in 2023, due to a spiral in the state’s salary bill, but managed to contain this rise”.

“I have many friends who are civil servants and I wish them all a very high salary, but I’m here as an economist. The cost of salaries should not take up an amount equivalent to 80 per cent of national wealth, because there will be no room for productive investment in the economy and in basic social areas,” she stressed.

Mayer-Cirkel argued that the wage reform should be continually monitored and evaluated so that people are paid according to their professional background.

The economist considered Mozambique’s progress under the programme agreed with the IMF to be satisfactory, namely the approval of the Sovereign Fund Law, the submission to parliament of the revision of the Public Probity Law and the progress the country has made in strengthening the regulatory and institutional framework against money laundering and terrorism, in addition to the already approved Single Wage Table (TSU).

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“The implementation of the TSU cost 28.5 billion meticais more than expected. The initial expected cost of reforming the wage bill during the 2022-23 period was 19.2 billion meticais, equivalent to 1.4 per cent of GDP,” he recalled.

The TSU was approved in 2022 with the aim of eliminating asymmetries and keeping the state wage bill under control in the medium term. However, its inception caused salaries to skyrocket by 36 per cent, from an expenditure of 11.6 billion meticais/month to 15.8 billion meticais/month.

The new state salary matrix has 21 levels, from 8756 to 165,700 meticais.

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