Former Mozambican Prime Minister and economist Luísa Diogo stated on Thursday (30th) that Mozambique managed to stabilize its economy while simultaneously launching a national reconstruction process during one of the most challenging periods in the country’s recent history. Her remarks were made during the 50th anniversary celebration of the Faculty of Economics at Eduardo Mondlane University (UEM) — the institution where she graduated and which she described as having played a decisive role in building the foundations of the modern Mozambican economy.
In a personal and institutional testimony, Luísa Diogo reflected on the period between 1986 and 2010, highlighting the active participation of the Faculty of Economics in drafting the Economic and Social Rehabilitation Program (PRES), an evolution of the earlier Economic Rehabilitation Program (PRE). The PRES included a social component proposed by UEM students, an innovation that would later influence the World Bank, which began to consider social impacts in structural adjustment programs.
Luísa Diogo recalled that during the 1980s, the country faced a deep economic crisis, with a compromised balance of payments, an unbalanced budget, and a devastated productive base. “At the Ministry of Finance, paying salaries was reason enough to celebrate,” she said, noting that at the time, just 25 companies accounted for 75% of national tax revenue. According to the former prime minister, the trust-based relationship established with those companies was crucial to keeping the state functioning. That close collaboration made it possible to anticipate solutions, ensure timely payments, and respond creatively to fiscal difficulties. “The health of those companies was the health of the State,” she summarized.
She also emphasized the Faculty of Economics’ role in training experts who participated in negotiations with the International Monetary Fund (IMF) and the World Bank, which led to major structural reforms in the country’s economy. These included tax and financial reforms, such as the introduction of the Personal Income Tax (IRPS), Corporate Income Tax (IRPC), Value Added Tax (VAT), and the Single Treasury Account system.
For the former leader, one of the most significant decisions of the post-war period was to pursue macroeconomic stabilization and national reconstruction simultaneously. “Some countries choose to stabilize first and rebuild later; others do the opposite. We decided to do both at the same time,” she said, defending a pragmatic, results-oriented approach.
In the early 2000s, Mozambique entered a new phase of structural economic transformation, combining large investment projects with the modernization of economic infrastructure and institutional consolidation. This path was accompanied by closer relations with both traditional and new partners, built on trust and transparency.
“The minister speaks truthfully, asks for what is necessary, and delivers concrete results,” she explained, describing the philosophy behind Mozambique’s engagement with international donors. This approach, she said, allowed the country to mobilize crucial financing, such as the extraordinary credit line from USAID, which accelerated the implementation of the Poverty Reduction Plan.
Luísa Diogo concluded her address with an encouraging message to current decision-makers and young economists, recalling that “between 1986 and 2010, we lived through one of the most remarkable periods in Mozambique’s economic history.” She emphasized that the courage to recognize the limits of the previous model and the ability to design homegrown solutions were key to building a uniquely Mozambican path to development.
Text: Felisberto Ruco
