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Mozambique: IMF Supports New Wage Policy for Public Sector
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Agencia de Informacao de Mocambique (Maputo)
19 December 2007
Posted to the web 19 December 2007
Maputo
The International Monetary Fund (IMF) supports the Mozambican government's plans to reform wages in the public sector - but admits that it has no idea by how much wages for senior staff should be raised in order to compete with the private sector.
At a Maputo press conference on Wednesday, IMF resident representative Felix Fischer spoke of the need for a public sector wage policy that would recruit and retain key staff "while maintaining fiscal sustainability".
He called for a detailed study of the current situation to assess exactly how much key staff earn. He wanted to put a monetary figure on the various perks that top civil servants receive in addition to their salaries (these might include housing subsidies, fuel subsidies, or payment of phone and electricity bills).
Fischer said there has so far been no "quantification" of how much might be needed to increase wages to the point where senior public servants would no longer feel the need to take on a second job in the private sector.
He noted that some donors are still paying "top-up wages" to civil servants involved in projects supported by those donors. In the future, after implementation of the new wages policy, "this should not be necessary".
Fischer denied that it was pressure from the IMF that had driven the Mozambican government to accept the principles of the Extractive Industries Transparency Initiative (EITI). He said the government was committed to acceding to the Initiative, and was receiving technical assistance from the World Bank and Norway.
He claimed there was no question of pressure, and the government "just needed time to decide on the matter". The IMF, he added, "urges all countries with extractive industries to accede to the Initiative. We are supporting Mozambique in the transparent management of its mineral resources".
Fischer rejected claims that Mozambican growth was just a mirage, and there was no real poverty reduction. He thought there was "no doubt" that the economy was growing at a rate of about seven per cent a year. He put the growth rate for the first six months of 20076 at 7.6 per cent, noting that this was slightly lower than the figure for the same period in 2006.
The growth in the economy, Fischer added, was due to a series of mega-projects, to expansion in construction often linked to mega-projects, and to "extensive agriculture" (i.e. an increased area under cultivation, rather than increased productivity).
"What is missing is strong growth in small and medium companies", he said. "This would have a major impact on employment and on reducing poverty".
Asked about last month's transfer of majority ownership of the Cahora Bassa dam on the Zambezi from the Portuguese to the Mozambican state, Fischer stressed that this had not increased the indebtedness of the Mozambican government. The bank loan of 700 million dollars used to purchase 67 per cent of the dam operating company, HCB, from Portugal, would be repaid by HCB itself, out of the sales of electricity.
He thought the impact of acquiring a majority stake in HCB would be positive for Mozambique in that HCB will now start paying corporation tax and a concession fee for the dam.
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A Monday statement from the IMF Executive Board on its review of Mozambique's performance in the first six months of a three year Policy Support Instrument (PSI) said that the Board "granted a waiver of non-observance for the quantitative assessment criterion on reserve money".
Asked to explain this, Fischer claimed that restrictions on money supply are necessary to avoid increased inflation. In the Mozambican case the money supply target agreed with the IMF "was slightly exceeded".
But Fischer said this was because "there was a greater demand for money, for structural reasons, than expected". The target figure had been too low, and exceeding it had no serious impact since "core inflation" (i.e. inflation minus food prices) remained below five per cent.
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| Copyright © 2007 Agencia de Informacao de Mocambique. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections -- or for permission to republish or make other authorized use of this material, click here. | |||||||||||||||||||||||||||||
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