Good afternoon. President Daniel Chapo’s talk of “reflecting” on the so-called single salary table or TSU for public sector employees touches on one of the government’s biggest problems, namely its abject shortage of cash and its inability to manage public finances.
The full Daily Briefing continues below for Pro subscribers. Subscribers to the Zitamar News tier can read the top half, including the full leader article, here.
One of the reasons that the Mozambican government is currently unable to repay lenders of its domestic debt on time is the disastrous way in which the single salary table has been implemented since 2022. It has helped to drive a doubling in domestic debt levels between 2020 and last year. The wage bill as a proportion of GDP had already been rising under the previous administration of President Filipe Nyusi, but wage costs accelerated under the TSU. According to figures from the International Monetary Fund (IMF), the average salary has increased by 35 percentage points since its implementation. Some entry-level salaries are said to have been almost doubled. While it may be reasonable for the lowest-paid to get the biggest pay rises, this suggests a lack of control. In 2022, wages accounted for 82% of tax revenues, far beyond comparable low-income and sub-Saharan African countries, according to IMF figures. After debt service is subtracted, there is hardly any money left. The result has been constant deficit spending.
