Good afternoon. When, as is all but certain, Daniel Chapo takes over as president of Mozambique next year, one of the items in his in-tray will be how to manage the country's ballooning domestic debt, which has doubled in the last four years (see below).
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Much of this cannot be explained by spending on the covid-19 pandemic. In fact, a great deal of the rise in debt, according to website Bloomberg, is due to the implementation of the government’s single salary table in 2022, a project which is now looking like a disaster. Originally intended to control the size of the public sector wage bill, the salary table seems to have had the opposite effect, thanks to constant errors and adjustments, and, it had to be said, opportunistic public officials taking advantage of the changeover to claim extra money. Analysis by the credit ratings agency S&P earlier this year found that, since at least 2018, spending has been consistently over budget and revenue collection has been almost always over-estimated.
