May 26, 2023
Mozambique Reduces Senior Officials’ Pay to Contain Wages
(Bloomberg) -- Mozambique will reduce pay and allowances for ministers and other senior public officials, Minister for Finance and Economy Max Tonela said, as the government grapples with a rising wage bill.
The changes will come through revisions to the law, and will result in pay cuts for deputy ministers, secretaries of state, lawmakers and others, Tonela said in a statement Thursday. Ministers will earn 67.5% as much as the president, where they currently receive three-quarters of his pay level, according to the proposed legislation.
Mozambique introduced a new law last year that aimed to shrink the gap between the highest and lowest paid public workers, while over the longer term lowering the percentage of gross domestic product that accounts for wages. The change last year caused a significant overrun of 3% of GDP in costs, the International Monetary Fund said this month, while encouraging the government to take additional measures to reduce the annual wage bill.
“Ensuring that the public wage bill is brought down is critical for safeguarding fiscal and macro sustainability,” Pablo Lopez Murphy, who led an IMF mission to the nation that ended May 5, said at the time.
Mozambique’s new so-called single salary table for other public workers will remain unchanged from levels introduced in January.
The IMF board approved a $456 million package for Mozambique a year ago. The third disbursement under the program was scheduled for March, and the government has yet to secure a staff-level agreement that the Washington-based lender’s board will then have to approve.
As part of the reforms under that program, the government agreed to replace one in every three employees who leave public service, except in education, health, justice and agriculture. The changes are meant to shrink the wage bill to 10.8% of GDP by 2026, from 13.8% in 2021, the government said in September.
(Updates with size of pay cuts in second paragraph)
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