German investment affected by attacks in northern Mozambique
Head of the International Monetary Fund (IMF) mission to Mozambique Ricardo Velloso (left) with Ari Aisen Resident Representative, in Maputo. Photo: Domingo
There were no kind words from the new head of IMF missions to Mozambique, Ricardo Velloso. After the 25 July – 3 August visit, he said the economy is only “recovering gradually” and that even more austerity is needed.
Velloso said “On the revenue side, the mission recommended removing VAT exemptions, except for basic basket goods, and strengthening VAT administration. It advised, on the spending side, reducing the size of the wage bill as a share of GDP through moderation in wage increases, particularly for top earners in the public sector, and parsimony in additional hires, which should be limited to urgent needs in social sectors.”
And it in a very pointed note probably referring to recent government guaranteed Chinese export credits for Xai-Xai airport and the Macuse port and railway, Velloso said “Given that public debt is in distress, the mission encouraged the government to rely to the maximum extent possible on external grant financing and highly concessional loans, while ensuring that issuance of debt guarantees strictly follows the new, stricter approval procedures established in December 2017. … The mission also stressed the importance to continue limiting other spending items through better prioritisation, including public investment outlays.”
By Joseph Hanlon