TSU: Mozambique pledges to adopt ‘corrective measures’

Login

Register

http://www.clubofmozambique.com/

TSU: Mozambique pledges to adopt ‘corrective measures’

4:21 CAT | 30 Jan 2024

in file CoM

The Mozambican government admits that the reform of the civil service salary scale, which began to be implemented in 2022, “encountered higher costs than estimated” and says it will move forward to “adopt credible corrective measures”.

“In addition to a package of corrective measures of about 1 percent of GDP (comprised of revenues and wage bill reducing measures), we endorsed a medium-term wage bill action plan to help reduce the wage bill to 10 percent of GDP [Gross Domestic Product] over the medium-term,” reads a letter sent to the International Monetary Fund (IMF), signed by the Minister of Economy and Finance, Max Tonela, and the governor of the central bank, Rogério Zandamela.

Addressed to the IMF’s managing director, Kristalina Georgieva, dated December 19th and accessed by Lusa this Friday, the letter formalised the request for approval of the third evaluation of the IMF assistance program to Mozambique, and release of the third tranche of support.

Hiring limits, freeze in nominal wages and promotions, half of 13th month

This” medium-term wage bill action plan” the Mozambican Government states in the letter to Georgieva, “includes policy measures”, namely “hiring limits, freeze in nominal wages and promotions, allocating half of the 13th month [whose annual payment is always dependent on financial availability] over 2025-28”.

The plan also includes “public financial management reforms”, such as “completion of the ongoing general audit and “proof of life” of all public sector servants to eliminate ghost workers in the HR [Human Resources] database and payroll”.

The letter recognizes that the wage bill reform “aimed at simplifying public employment compensation and managing the cost of public sector employment”, as well as “improving controls and predictability over wage bill spending”.

“During the implementation phase, we encountered higher costs than estimated for the wage bill reform resulting in primary deficit after grants of 2.8 percent of GDP compared to a projection of 0.2 percent of GDP. We are committed to adopting credible corrective measures to ensure fiscal discipline and achieve the medium-term fiscal consolidation envisaged under the program,” Tonela and Zandamela assert in the letter.

Lusa reported this week that the implementation of the Single Salary Table (TSU) in Mozambique, strongly contested by various sectors of the public service, cost around 28.5 billion meticais (€410 million), “more than expected “.

“The expected initial cost of the wage bill reform over the period 2022–23 was MT19.2 billion (1.4 percent of GDP), however, the implementation of the TSU ended up being MT28.5 billion (2.1 percent of GDP),” an IMF document on the evaluation of the assistance program for Mozambique reads.

The IMF, which defends the need for this measure, explains that “this overrun” in implementation costs was “was due primarily to difficulties” in implementing “a complex wage bill reform”, including “incorrect mapping of public servants to the new pay scale”.

“Underestimating the cost of the TSU,” led to “insufficient wage bill saving measures to meet the cost,” reads the report. “The additional cost was about 2.5 percent of GDP in 2022. The fiscal slippage was financed primarily through expensive domestic financing,” the IMF document warns.

With the implementation of the TSU, the government states that it hopes to “improve its salary and remuneration expenditure programming processes”, lowering the wage bill ratios from the previous 15% of GDP to 14.4% last year and 12.5% in 2024, “in line with international and regional parameters”.

The application of the new salary scale in the public service has been the target of strong opposition from various professional classes, such as doctors and teachers, with a record of salary delays and cuts in security forces, criticised by various segments of the Mozambican state apparatus.

Source: Lusa