Mozambique: MDM considers measures to stimulate the economy “counterproductive”

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Mozambique: MDM considers measures to stimulate the economy “counterproductive”

3:37 CAT | 12 Aug 2022

Image: MMO

The Mozambique Democratic Movement (MDM), the country’s third-largest political party, yesterday said that the measures to stimulate the economy announced on Tuesday by President Nyusi were “counterproductive”, as they do not in its understanding do enough to combat poverty.

“The reduction of the Corporate Income Tax [IRPC] in transport, agriculture and aquaculture is counterproductive, because they are areas mostly operated by informal workers, or are still very domestic,” like agriculture, which in Mozambique has a pronounced family dimension, MDM spokesman Ismael Nhacucue said.

Nhacucue argued that the VAT rate on fuels used by public transport should be lowered from the current 17% to 12% in order to alleviate the travel costs borne by the poor.

“The measures presented by the head of state do not solve the problems that the country faces today,” the politician said, predicting that hunger and poverty would continue to prevail in Mozambique.

On Tuesday, Filipe Nyusi announced 20 Economic Acceleration Stimulus Package (PAE) measures aimed at responding to the country’s growth needs, the negative impact of the Russia-Ukraine war, armed violence in Cabo Delgado province, northern Mozambique, and natural disasters.

The measures announced lower the IRPC in agriculture, aquaculture and public transport from 32% to 10%, and VAT from 17% to 16%.

The Mozambican head of state also signalled the introduction of tax incentives for new investments over the next three years, without as yet specifying the rates of any such incentives.

The PAE package increases the share of revenues from natural resources transferred to the provinces where they are extracted from 2.5% to 10%, and foresees the establishment of a mutual loan guarantee fund worth US$250 million, to help banks make credit available in the economy at more affordable interest rates.

Source: Lusa