Maputo — The International Monetary Fund (IMF) is "fully confident" that the Mozambican government is dealing appropriately with the crisis in passenger transport in Maputo.
A mission of six IMF Executive Directors has been visiting Maputo, a fortnight after serious rioting over rises of up to 50 per cent in the fares charged by the private minibuses that provide much of the capital's transport. The riots paralysed the city for the best part of a day, and forced the government and the Federation of Road Transport Associations (FEMATRO) to revoke the fare increase.
To compensate the private transport operators for the lost fare increase, the government has promised to subsidise the diesel that the minibuses use. Although diesel now costs 35.35 meticais a litre, the minibus operators will only pay 31 meticais a litre.
Subsidies are frequently anathema to the IMF - but not this one. When, at the delegation's closing press conference, AIM asked its spokesperson, Age Bakker of Holland, for the IMF's view on the subsidy, he described passenger transport as "a public good", and said it was up to the judgment of the government "how much it should subsidise, and how much the public should pay"
He recognised that the root cause of the riots was the rise in world oil prices, which have doubled in two years, and "somebody has to pay that increased price".
But that "somebody" did not have to be the traveling public - at least, not in the short term, though Bakker did add the caveat that "sooner or later" the higher fuel prices would have to be reflected in fares.
But the IMF seemed to have no problem with the current level of subsidy. Bakker expressed "full confidence" in the government's handling of the matter, and he was confident that it would not prove damaging in terms of fiscal resources.
Bakker said the Mozambican economy had done "very well" over the past decade and a half. Not only had the Gross Domestic Product grown by around eight per cent, but inflation was "relatively under control", as was tax collection. The government's performance was "to be commended".
The key problem, in Bakker's view, was to ensure that the bulk of the population benefited from economic growth. He recognised that poverty levels remained high, and agreed with the government that poverty reduction should be the top priority, and that the country's wealth should be "better distributed".
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He wanted to see an extension of financial services to rural areas, and moves to build up small and medium companies, on which he believed the country's prospects of generating jobs depends. The key to job creation was "private sector development", he claimed.
"We have advocated making it easier to establish small and medium companies", he said.
Bakker also called for "fiscal transparency" with regard to future large scale industrial projects, and claimed that this was also the concern of the Finance Ministry.
His colleague, the French executive director, Ambroise Fayolle, praised the government's "quite exemplary" relations with donors (the delegation met earlier in the morning with representatives of the donor community, notably of the 19 donors and funding agencies that provide direct support to the state budget).
Asked whether the IMF thought the government was using foreign funds appropriately, the delegation said the real problem was not whether resources were used properly, but "whether there are enough resources to meet the challenges".
The Russian executive director, Aleksei Mozhim, pointed out that the bulk of foreign support nowadays takes the form of direct budget support. The budget deficit before grants was around 20 per cent, "but after grants it come down to six per cent", he said.
So it was impossible to look at the use of foreign aid, outside of the budgeting process as a whole.
Repeatedly the delegation praised the "prudent" macro-economic policies followed by the government, but stressed the need for poverty reduction alongside continued high growth rates.
