The IMF has imposed a major wage freeze, which implies wage cuts over the next three years. In effect, government has agreed that its total wage bill of $3.3bn this year must fall to $3.0 bn next year, and $2.9 bn in 2027.
Not only does that mean no increases for current staff, but if more nurses and teachers are hired, everyone else’s wage must be reduced. Mozambique ’s IMF Resident Representative Alexis Meyer Cirkel ends his term in August, and he has left a massive time bomb for the new government to be elected on 9 October. The IMF squeeze might also be seen as retaliation for the governments earlier victory over the IMF on hidden debts.
But the IMF report warns that"continued weakness in non-mining growth delaying poverty reduction and intensifying social unrest in the north." Indeed the IMF says there is a"high risk" of"deterioration in the security situation". The government should"enhance security and socioeconomic policies in the northern region," which seems impossible under the tighter squeezeThis is an imposition of austerity just as the IMF did to Mozambique 36 and 30 years ago.
Then on Friday 12 July the IMF released its 164 page package of documents with includes its review under the Extended Credit Facility and its bi-annual"Article IV consultation", based on 2-15 May negotiations in Maputo. It also issued a report to stress its opposition to state-owned enterprises. Tables and recommendations in the various documents do not always agree, creating some confusion.
The National Teachers’ Association has threatened to boycott lessons and go on strike because the government has not pay them for months of overtime they have worked. It also protests that because of teachers shortages they are forced to work with classes of over 100 pupils, which worsens education quality.
The government and IMF have agree a token hiring freeze. Excluding health, education, agricultural extension and justice - who are the vast majority of state workers - only one in three leaving public employees will be replaced and promotions and wages are frozen.The Judges Association of on 6 July agreed a partial general strike to start on 9 August, which would be the first-ever strike of judges in Mozambique.
Trying to include everyone's claims in the TSU became a nightmare, and the wage bill jumped by a half - from $2.1 bn in 2021 to $3.0bn in 2022, the first TSU year. The huge jump in wages was compensated for by spending $0.6bn less on capital spending such as roads.
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