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Republic of Mozambique: Selected Issues and Statistical Appendix

Author(s):
International Monetary Fund
Published Date:
September 2005
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II. Tax and Customs Reforms in Mozambique: An Overview13

A. Introduction

32. Since 1996, Mozambique has comprehensively and gradually modernized its tax system. The success of the reforms can be attributed to the strong ownership and commitment of Mozambican authorities, the proactive and coordinated involvement of donors, and the Fund’s technical assistance. This paper takes stock of the tax reform in Mozambique—pointing out to some shortcomings—discusses future perspectives, and offers some recommendations.14

33. The following are the paper’s main findings:

  • Mozambique has, at present, a comprehensive tax system that is broadly in line with international best practices. Consumption and income taxation match almost perfectly the recommendations of major tax policy experts. The tariff structure is relatively simple and low, with modest escalations. The authorities have made considerable progress in implementing laws and procedures in tax administration and, especially customs, that meet international standards.
  • Mozambique’s tax ratio, which is low compared with that of other sub-Saharan African countries, has stagnated in the past few years, because of the remaining weaknesses of its tax system. For example, the tax base is narrow as a result of generous tax exemptions, especially for megaprojects; the rate of noncompliance is relatively high and tax enforcement is ineffective.

34. This paper is organized as follows. Section II compares the prereform and postreform tax systems. Section III describes in detail the reform of custom duties, domestic taxes, and tax incentives. Tax administration reforms are described in Section IV. Section V reports on the main achievements and remaining weaknesses of the Mozambican tax system. Section V sums up and makes some recommendations.

B. Background

35. Between 1975, when Mozambique gained its independence, and late 1980s, the economy declined, the informal sector grew rapidly, and tax administration disintegrated, as a result of the failure of the growth strategy under the planned economy and the civil war. As part of its transition from a planned economy to a market economy. Mozambique implemented basic tax policies in 1987.15 It started by introducing taxes on business profits and labor income, 16 in which each source of income was taxed separately under a scheduler income tax. It also levied a progressive “complementary tax” on individuals’ capital income and profits.17 The 1987 law also established a multirate cascading-type turnover tax, with rates ranging from 1 to 20 percent, on the value of transactions of goods and services (Imposto de circulação) carried out by producers, businesspersons, and importers. The turnover tax was supplemented by two other taxes: (i) a specific consumption tax (Imposto de consumo), with rates ranging between 20 and 75 percent, on domestic and imported goods considered luxury items, superfluous, or unhealthy, such as tobacco and alcohol; and (ii) specific fuel taxes. In 1991 a major tariff reform was implemented to eliminate specific import duties, simplify the tariff schedule, and establish the maximum tariff rate at 35 percent.

36. The tax system established in 1987 was highly complex, distortionary, and inefficient and had a low revenue-generating capability. The main problems were: (i) a narrow tax base, because of the large informal sector, and widespread exemptions18 and fiscal incentives; (ii) a rate structure complicated by, especially, the scheduler income taxes and eight rates for consumption taxes; (iii) distortions introduced by cascade-type sales and excise taxes, which raised prices and amplified the tax burden for the final user and increased the difference between the prices of the formal and informal sector, thereby increasing incentives for tax evasion and, in turn, contributing to the enlargement of the informal sector; (iv) the erosion of revenue from specific taxes, especially fuel taxes, because of rampant inflation; and (v) high level and dispersion of tariff rates, which increased incentives for tax evasion and smuggling.

37. The prereform tax administration was also highly inefficient owing to (i) complex and out-of-date administrative procedures, which encouraged rent-seeking behavior and corruption, especially at customs; (ii) unpredictable changes in legislation and a lack of transparency; (iii) a poorly trained staff, and a lack of computerized storage of information and taxpayer registry to carry out effective audits and enforcement.19 In particular, customs management and controls were deficient in all areas because of rent-seeking activities that contributed to the low levels of trade taxes being collected.

38. After peaking at 12.4 percent in 1993, the tax revenue ratio began to decline during the second half of the 1990s (Table 1). In spite of the inefficiencies of the tax system, the liberalization of the economy plus higher trade flows increased the tax revenue ratio from 8.4 percent of GDP in 1987 to 12.4 percent in 1993. The increased collections of indirect and trade taxes were especially important, accounting for over two-thirds of the total increase in tax revenues. Revenue from income taxes remained low, at about 2 percent of GDP, reflecting the complex rate structure and overlapping schedules. In 1993, a tax package was implemented with the view to reducing the tax burden on business income and wages and promoting investment and exports. In addition, imports tariffs and customs fees were further reduced to lower the tax burden on production costs.20 A ban on exports of raw cashews (Mozambique’s second-largest export) was replaced in 1995 by an export tax with a 40 percent rate. The tariff reduction, combined with further weakening of tax administration, especially of customs, reduced tax collection to 10 percent of GDP in 1996.

Table 1.Mozambique: Government Revenues, 1987-2005(In percent of GDP)
19871993199619992000-02200320042005

Proj.
Total revenue9.913.610.812.012.612.912.313.2
Tax revenue8.412.49.911.011.212.011.311.8
Taxes on income2.22.01.91.72.02.82.62.8
Personal income taxn.a0.91.10.91.31.71.71.9
Corporate income taxn.a1.00.80.80.71.10.80.8
Taxes on goods and services4.36.75.37.06.96.96.97.2
Turnover taxn.a4.03.01.8
VAT2.74.84.74.75.0
Excisesn.a1.91.21.11.01.01.00.9
Petroleum productsn.a0.81.01.51.11.11.21.3
Taxes on international trade1.43.52.12.02.02.01.71.7
Other tax revenues 1/0.50.30.60.40.30.30.30.2
Nontax revenue 2/1.51.20.90.91.31.00.90.9
Source: Mozambican authorities; and IMF staff estimates.

Includes stamp tax, poll tax, tourism tax, and motor vehicle tax.

Includes rent from real estate, fees and charges, and social security contributions, and nonfinancial public enterprise dividends.

Source: Mozambican authorities; and IMF staff estimates.

Includes stamp tax, poll tax, tourism tax, and motor vehicle tax.

Includes rent from real estate, fees and charges, and social security contributions, and nonfinancial public enterprise dividends.

39. A carefully planned tax reform was launched in 1996 to create an effective and revenue-generating tax system (Table 2). The authorities’ main objectives were to increase the tax revenue ratio to GDP gradually, enhance the system’s administrative efficiency, obtain greater tax equity by broadening the tax base and applying moderate rates, and promote economic activity in general and investment in particular (Coelho and others, 2001). On tax policy, initial reforms focused on reducing the level and dispersion of tariff rates and eliminating ad hoc exemptions. The next steps focused on the removal in 1999 of the old cascade-type sales and excise taxes which had pernicious economic effects by introducing well-designed excises and value-added taxes. In 2002, the authorities streamlined tax incentives by enacting the Code of Tax Benefits for Investment, and consolidated the old scheduler and complex income taxes into a single corporate income tax (CIT) and personal income tax (PIT). Recently, the government raised specific fuel taxes significantly and introduced an automatic quarterly indexation mechanism to prevent their erosion in real terms. Regarding tax administration, the authorities gave priority to resolving the problems of administering customs duties and implemented limited reforms of domestic tax administration. Later on, important administrative reforms were implemented at the time of introducing the VAT in 1999. In 2001, the authorities embarked on a comprehensive tax administration reform, including improvements in collection procedures and increased enforcement capacity.

Table 2.Tax Reform in Mozambique
TaxPrereform Tax SystemPostreform Tax System
Tax on income and profitsScheduler income taxes; each source of income was taxed separately. Rates ranged from 0 to 55 percent.Two separated income taxes, introduced in 2003, are levied on overall income of corporations and individuals. Rates range from 10 to 32 percent.
Tax on salesA multirate cascading-type turnover tax, with rates ranging from 1 to 20 percent, on the value of transactions of goods and services carried out by producers, businesspersons, and importers.A consumption-type VAT with a single 17 percent rate is levied on invoices of goods and services, minus the VAT paid on invoices of inputs and on imported goods.
ExcisesConsumption taxes on domestic and imported luxury or unhealthy goods. Rates ranged from 20 to 75 percent.Consumption taxes on domestic and imported luxury or unhealthy goods. Rates range from 15 to 65 percent.
Fuel TaxSpecific tax per unit of fuel with no adjustment for inflation.Specific tax per unit of fuel with a quarterly adjustment for inflation of previous months (with a cap of 5 percent).
Customs and export dutiesHigh number of tariffs (12) and average import-weighted tariff rate (18.4 percent). Maximum tariff at 35 percent. Large number of ad hoc exemptions. Tax on cashew exports with a 40 percent rate.Reduction in the number of tariff rates to five and in the average import-weighted tariff to 7 percent. Maximum tariff at 25 percent. Ad hoc exemptions eliminated. Tax on cashew exports reduced to 20 percent.
Tax administrationComplex and out-of- date administrative procedures and legislation; unpredictable changes in legislation; unqualified staff; rent-seeking activities.Significant progress in modernization of customs legislation and management. Introduction of a specialized VAT unit, a unit for large taxpayers, computerized systems, and a taxpayer registration system.

C. Tax Policy Reforms

Custom and export duties reform

40. In the late 1980s, Mozambique embarked on an across-the-board revision of the tariff structure, which has gathered significant momentum by 1996. The authorities implemented a major tariff reform in November 1996 by reducing the number of tariff rates from 12 to 5, keeping the maximum tariff at 35 percent, and eliminating discretionary customs exemptions. As a result, the average import-weighted tariff rate declined from 18.4 percent in late 1980s to 11 percent in 1996, (Subramanian and others, 2000). As part of the agreement with the Southern African Development Community (SADC), the authorities further reduced the top tariff rate from 35 percent to 30 percent in April 1999 and further liberalized the import tariff structure in 2003 by reducing the maximum tariff rate to 25 percent. As 1 of 11 members of the SADC currently implementing the organization’s trade protocol, Mozambique has eliminated tariffs on a number of the goods it trades with other implementing members. As a result, its tariff structure is relatively simple with modest escalations 21 and its import-weighted average tariff rate is low (about 7 percent), making Mozambique one of the most open trade policy regimes in sub-Saharan Africa (Table 3). As regards export duties, the 40 percent rate of the tax on cashew exports was reduced to 14 percent in 1996, although in October 1999 it was increased to 18-20 percent.

Table 3.Tax Systems in Selected East African Countries(rates of main taxes in percent)
MozambiquKenyaTanzaniaUgandaRwandaBurundi
Personal Income Tax 1/10 - 32 (5 brackets)10 - 30 (5 brackets)0 - 30 (5 brackets)0 - 30 (4 brackets)0 - 35 (5 brackets)10 - 60 (12 brackets)
Corporate Income Tax 1/323030303535
Value Added Tax1716201718
Unweighted average tariff8171371818
Import-weighted average tariff7
Sources: International Bureau of Fiscal Documentation, Africa Tax System, and IMF staff estimates.

Refers to standards rates.

Sources: International Bureau of Fiscal Documentation, Africa Tax System, and IMF staff estimates.

Refers to standards rates.

Indirect taxes reform

41. A well-designed VAT was successfully introduced in Mozambique in 1999, in line with advice from the Fund. In 1995, the IMF recommended moving from the traditional sales tax, which was cumulative, or cascading, to a VAT (see Castro and others, 1995). Accordingly, Law 3 of 8 January, 1998, introduced a single-rate, broad-based consumption-type VAT into the national tax system.22 The rate of the tax is set by the council of ministers, subject to a ceiling of 25 percent. The current rate is 17 percent, in line with that in other East African countries (Table 3 and 4). VAT collection is the difference between the VAT levied on the invoices of sales of goods and services within the national territory, and on imports of goods to the country, minus the VAT paid on invoices of inputs, including capital goods. An enterprise may fall within one of the following regimes: (i) a normal regime, characterized by a minimum turnover of Mt 250 million a year, a 17 percent rate, reimbursement of VAT paid on inputs, and monthly payments; (ii) a simplified regime, characterized by a turnover below Mt 250 million, a 5 percent rate on sales volume, no reimbursement for VAT paid on inputs, and quarterly payments; (iii) an exempted regime with no payment of VAT on sales, and no reimbursement for VAT paid on inputs, such as in the case of fishing, the financial sector, education, culture, health, garbage removal, lease and rental of real property, and immovable property transactions; and (iv) a zero-rate regime, with no payment of VAT on sales but reimbursement for VAT paid on inputs, such as in the case of exports, medicines, and essential agricultural domestic products.23 Imports of a few agricultural products, such as sugar, pay VAT on imports (plus duty24), whereas domestic producers are exempted. This represents a deviation from international best practices, which establish that the VAT, a domestic tax and not an import duty, should be the same for domestic and imported goods.

Table 4.VAT Revenue Productivity in Selected African Countries 1/
Current StandardTotal VAT RevenueRevenue Productivity 2/
VAT Rate(In percent of(In percentBased onApplicable
(In percent)consumption)of GDP)ConsumptionGDPyear
Botswana 3/10.06.254.000.6250.4002004
Kenya 3/16.06.105.300.3810.3312004
Mozambique17.05.254.680.3090.2752004
Rwanda 4/18.04.184.210.2320.2342004
Tanzania 3/20.04.654.100.2330.2052002
Uganda 3/17.04.504.000.2650.2352004
Sub-Saharan Africa 5/16.75.054.140.3210.2612003
Asia and Pacific 5/6/11.45.434.210.4760.3652002
Middle-East and Central Asia17.16.44.20.3540.2372003
Western Hemisphere 7/14.46.55.30.4390.3652002
Sources: IMF, country documents, World Economic Outlook, and IMF staff estimates; International Bureau of Fiscal Documentation, African Tax System; Corporate Taxes 2003-2004, Worldwide Summaries (Pricewaterhouse Coopers).

Central government.

Revenue productivity = Total VAT revenue as percentage of consumption or GDP, divided by the VAT standard rate.

The data reported as fiscal year in the country documents; however, for comparison purposes, the data were converted into calendar year.

Budgetary central government.

Unweighted average.

Excluding Australia, Japan, Korea, and New Zealand.

Excluding Mexico and Canada.

Sources: IMF, country documents, World Economic Outlook, and IMF staff estimates; International Bureau of Fiscal Documentation, African Tax System; Corporate Taxes 2003-2004, Worldwide Summaries (Pricewaterhouse Coopers).

Central government.

Revenue productivity = Total VAT revenue as percentage of consumption or GDP, divided by the VAT standard rate.

The data reported as fiscal year in the country documents; however, for comparison purposes, the data were converted into calendar year.

Budgetary central government.

Unweighted average.

Excluding Australia, Japan, Korea, and New Zealand.

Excluding Mexico and Canada.

42. The Mozambican VAT revenue productivity is low25 (Table 4). VAT collection in Mozambique accounted in 2004 for 4.7 percent of GDP (5.3 percent of total consumption), compared with 2.7 percent of GDP in 1999 (3 percent of total consumption). The 2004 VAT collection corresponds to 40 percent of total tax revenues and gives rise to a VAT productivity of about 0.275, which is in line with the average for African countries and slightly above the average in the Middle East, but low compared with Kenya and Botswana, and other regions.

43. As part of the reforms, the authorities assigned lower rates to excise taxes and increased specific fuel taxes. In 1999, excises rates were lowered from the initial rates of 20-75 percent to 15-65 percent.26 They were levied on the same goods and items as before (domestic and imported goods considered luxury items and superfluous or unhealthy, such as tobacco and alcohol), with some expansion of the coverage to include musical instruments, games, and certain items of sports equipment. As a result, the list of goods subject to excises seems overly large, and it is doubtful whether the taxation of some of these product is effective or even warranted (Coelho and others, 2001). Specific fuel taxes were not systematically revised, and so their collection declined by 65 percent in real terms between 1997 and 2002. In May 2003, the government raised specific taxes on petroleum products by 62½ percent to offset much of the erosion in real terms.27 A decision was also made to earmark the fuel tax revenue for the road maintenance fund. In late January 2004, the authorities increased the specific fuel taxes by an additional 2 percent and adopted an automatic quarterly adjustment mechanism to prevent their erosion in real terms (with a 5 percent cap).

Direct taxes reform

44. In 2003, the previous scheduler income taxes were replaced by the CIT and the PIT designed in line with international best practices. The CIT applies to all commercial entities, cooperatives, public companies, and law corporations. The CIT’s general rate is 32 percent, broadly in line with other East African countries (Table 3). It is levied on the overall profits of all Mozambican enterprises and on all Mozambican-sourced income of foreign enterprises. In 2003, which was the first year of application, it mobilized 1.1 percent of GDP (Table 1). There are special rates for agricultural income (10 percent until 2007), large mining companies (24 percent in the first five years until 2010), tax free zone operators and enterprises (12.8 percent in the first 10 years), and agriculture, handicrafts, and cultural cooperatives (16 percent). The CIT includes generally accepted provisions for doubtful debts, losses, inventory depreciation, and double taxation of dividends. Exemptions and deductions are broadly in line with international practices. As regards the new PIT, it is levied on the overall income of all Mozambican residents and all Mozambican-sourced income of foreigners resulting from28 (i) employment income, which is subject to withholding at the source; (ii) the income of self-employed workers, professionals, and owner-operated enterprises; (iii) interest, dividends, and capital gains; (iv) income from the leasing of real estate; and (v) earnings from lotteries, gambling, and other incomes. Rates range from 10 to 32 percent according to five brackets of income, in line with other East African countries (Table 3). For the first time, personal income taxation in Mozambique includes deductions defined according to personal and family status, in line with international best practices. Other allowed deductions are necessary expenses to obtain the taxable gross income, including social security and union contributions. The main exemptions involve income from interest, including implicit income of treasury bonds,29 and pensions. During 2003, the first year the personal income tax was applied in its current format, revenue amounted to 1.7 percent of GDP, of which 90 percent corresponded to employment income (Table 1).

The reform of tax incentives to promote investment

45. Before 2002, investment tax incentives in Mozambique were granted according to a large, fragmented, and disperse legal framework and without any clear criteria or rules.30 Investment incentives were given in the form of tax holidays, in particular, profit tax reductions of 50 percent to 100 percent (depending on the economic sector or the geographical region) for up to 10 years; and exemptions from import duties on capital goods. The revenue forgone on investment incentives was estimated at 3.6 percent of GDP in 2000 (Goorman, Sab, and Ramos, 2000).

46. In 2002, the government rationalized investment tax incentives by enacting the comprehensive Code of Tax Benefits for Investment.31 The two main purposes of the new code were to consolidate in a single text the legislation on tax incentives and to harmonize it with the reformed income taxes and mining and petroleum legislation.32 To promote investment in the manufacturing sector, the government introduced additional legislation in 2003 permitting qualifying firms in certain sectors (garments, chemicals, engineering, food and printing) to import inputs duty free. Under current legislation, investment tax incentives in Mozambique can be granted according to (i) a general incentive scheme; (ii) specific incentive schemes for agriculture, hotels and tourism, large-scale investment projects, rapid development zones, mining, and petroleum legislation; and (iii) industrial free zones. Current legislation also allows for increased tax benefits for investment located in less developed areas of the country.

47. The new code reduces reliance on income tax holidays by providing alternative incentives in the form of accelerated depreciation allowances and tax credits. The general incentive scheme includes (i) an exemption from customs duties for capital goods; (ii) a tax credit on corporate or personal income taxes of 5-15 percent of investment in tangible fixed assets; (iii) investment deductions for expenses incurred in information and technology and training of Mozambican staff; (iv) an accelerated depreciation allowance; (v) a 150 percent deduction for expenditures for the construction or restoration of infrastructure; and (vi) a 50 percent deduction on the rate of the real property transfer tax in agricultural, industrial, and hotel activities. For certain activities, including agriculture, hotel and tourism, large-scale investment projects, rapid development zones, mining, and petroleum, these incentives are increased, and corporate income rates reduced (Table 5). Imports of capital goods to be used for the exploration and exploitation of petroleum also benefit from an exemption on VAT and excise duties.

Table 5.Mozambique: Specific Tax Incentives for Investment under the Corporate Income Tax
AgricultureTourismLarge-Scale ProjectsRapid Development ZonesMinigPetroleum
Reduced Rates6.424.024.0
(in percent)(until 2012)(in five first years until 2010)(in five first years until 2010)
Tax credit (in percent of investment costs)8 to 1820 to 3020 (over the first five years)
Source: International Bureau of Fiscal Documentation, Africa Tax System.
Source: International Bureau of Fiscal Documentation, Africa Tax System.

48. As part of the reform, legislation was enacted to streamline the tax incentives of duty-free zones.33 For VAT purposes, industrial free zones are not included in Mozambican fiscal territory. Any Mozambican supply of goods and services provided to a free zone enterprise qualifies as an export for tax purposes. Supplies of goods and related services from and in these areas are treated as zero-rated, provided that they are not used or consumed within these areas. Therefore, free zone operators are exempted from the VAT and excises duties. They also enjoy exemptions from customs duties on capital goods and the real property transfer tax and could benefit from a reduced rate (12.8 percent) in the corporate income tax rate and other tax benefits regulated by the Code of Tax Benefits. At present, there are three such zones in Mozambique (see Box 1).

D. Tax Administration Reform

Reform of customs administration

Given the poor customs collection in 1994-95,34 the government launched an ambitious reform of customs administration in 1995 with the purpose of raising revenues; facilitating legitimate trade by combating entrenched smuggling and corruption; and creating a modern, effective, and reliable customs administration. To that end, a special unit in charge of implementing the reform (Unidade Técnica para Reestruturação das Alfandegas-UTRA) was created, and the custom authority (Direcção Geral de Alfandegas-DGA) was reorganized and granted a semi-autonomous status. In addition, the government made a strategic decision in 1996 to contract out the management of customs operations from 1997 to 1999, in order to bring in outside expertise to manage customs operations and implement effective preshipment inspections to assist in the determination of the dutiable value of imports. With financial support from donors, and following an international tendering process, a contract was awarded in 1996 to a foreign company to run customs and implement a three-year reform process focused on institution building, staff training, and restructuring. A subsequent three-year contract for a phase-out period was signed in 2000. In 2003, the customs management was devolved to the government, with continuing support from a foreign company in a few critical areas.

Box 1.Tax Benefits of Industrial Free Zones (IFZs) in Mozambique

Mozal IFZ (MOZAL) is located in the province of Maputo, at Belulane. It was created by Decree 45/97 for 50 years, with a possible further 50-year extension, under the condition of employing at least 250 Mozambican nationals. Activities carried out in the zone are construction and aluminum smelting for export. The main tax benefits are exemptions from the corporate income tax, the VAT, excises, customs duties on imported capital goods, the stamp tax, the real property transfer tax, and the municipal tax on rental income. A 1 percent substitute corporate income tax has been levied on Mozal since two years after its creation. Allowable deductions include expenses related to staff training, and improvement of the infrastructure of the free zone. Below certain limits, foreign employees and suppliers of services and information and technology to Mozal benefit also from exemptions in the personal and corporate income taxes, respectively.

Moma IFZ (ZFIMo) is located in the province of Nampula, at Moma, and was created by Decree 45/2002 for 20 years, with a possible further 20-year extension. Activities carried out in the zone are construction and operation of a heavy sand-processing unit for the production of minerals for exports. ZFIMo’s main tax benefits are exemptions from the corporate income tax, the VAT, excises, customs duties on imported capital goods, the real property transfer tax, and the municipal tax on rental income. A 1 percent substitute corporate income tax has been levied on enterprises operating in ZFIMo since seven years after their creation. Foreign workers cannot represent more than 15 percent of the total workforce.

Limpopo Corridor Sans IFZ (ZFIL) is located in the province of Gaza, at Chbuto, and created by Decree 7/2002 for the exploitation of heavy mineral sands. Its main tax benefits are exemptions from the VAT, excises, customs duties on imported capital goods, the stamp tax, the real property transfer tax, and the municipal tax on rental income. A 1 percent substitute corporate income tax has been on ZFIL since seven years after its creation. Allowable deductions include expenses related to staff training and improvement of the infrastructure of the free zone. Below certain limits, foreign employees and suppliers of services and information and technology to IZFIL benefit also from exemptions in the personal and corporate income taxes, respectively. In-kind remunerations of Mozambican workers at ZFIL are not subject to the personal income tax.

49. The reform has been successful in modernizing customs legislation and procedures and improving staff recruitment and resource allocation. The primary reforms are (i) the streamlining of custom legislation and compilation in one coherent body of laws and regulations standards; (ii) the simplification of administrative requirements and declaration forms; (iii) the computerization of procedures; (iv) the creation of an anticorruption unit within the customs authority, for the disclosure of fraud and corruption and related applied penalties; (v) the improvement of management capacity by providing higher salaries and more flexibility within pay grades in order to link performance to pay, with premiums as high as 18 percent within each pay grade for outstanding performance; (vi) the implementation of a career system for customs staff, and (vii) the development of a training plan for new and current employees, with evaluations of customs staff taking place twice each year.35

Reform of domestic taxes administration

50. Initially, reforms focused on supporting the collection of indirect taxes; more comprehensive reforms have recently been adopted. The introduction of the VAT in 1999 prompted the implementation of important reforms, including (i) the creation of a specialized central VAT unit, with newly recruited staff, organized along functional lines; (ii) the computerization of VAT revenue collection; (iii) the implementation of new audit procedures; and (iv) the introduction of a unique taxpayer identification number (Numero único de identificação tributaria) for each firm subject to the VAT. In addition, a pilot large tax payer unit and special monitoring procedures were introduced for the 2500 largest VAT payers, and VAT collection through the banking system was allowed.36

51. Since 2001, reforms have been guided by the objective of strengthening the administrative efficiency of the whole tax system. A special tax reform unit (Unidade de Reforma Tributaria dos Impostos Internos—URTI) was created in 2002. In 2003, the VAT filing and payment systems, based mainly on the taxpayer’s self-assessment and an organized routine for the full processing of tax returns, were extended to the new CIT and PIT, and special units for large tax-payers were created in Maputo, Beira, and Nampula. Other important reforms are under way, including (i) the development of computerized systems for the collection of the new personal and income taxes, (ii) the modernization of audit and inspection procedures through recently approved legislation; and (iii) the strengthening of the internal regulation and staff status of the domestic tax authority (Direcção Geral do Impostos-DGI) in preparation for its merger with the customs agency into a Central Revenue Authority by end-2005; and (iv) the establishment of tax tribunals, in line with the Organic Law for Tax Tribunals approved in 2004, which allows for the establishment of a system for the resolution of tax disputes. In addition, congress is expected to approve important legislation in the second half of 2005, including a draft law creating the CRA and a draft general tax law that sets out principles to determine tax liabilities and exemptions and methods of tax collection, modernizes enforcement procedures and the appeals process, strengthens tax penalties, and establishes taxpayers’ rights.

E. Main Achievements and Remaining Weaknesses of Tax Reforms

Main achievements

52. Tax reforms have sharply reduced dependence on trade taxes while increasing overall revenue (Table 1). Tax revenues as a percentage of GDP have grown by 1.4 percent since 1996, in a period characterized by strong growth, mainly driven by exempted sectors (i.e. agriculture and megaprojects), and significant reductions in import tariffs. The largest revenue gain came from the introduction in 1999 of the VAT, to replace an inefficient and ineffective sales tax. As a result, taxes on goods and services increased to 6.9 percent of GDP in 2004, compared with 5.3 percent of GDP in 1996. Income tax revenue also increased by ¾ of 1 percent of GDP over this time frame, to 2.6 percent of GDP in 2004, following major tax reforms enacted in 2002 and 2003. Revenue from taxes on international trade has been reduced by about ½ of 1 percent of GDP since 1996, due to an across-the-board reduction in import duty rates. Trade taxes now account for 15 percent of tax revenues, down from 21 percent in 1996.

53. Through its reform, Mozambique’s has made its tax system relatively sophisticated. It rests on well-designed consumption and income taxes that are in line with international best practices and have moderate rates, and a relatively simple and modestly escalatory tariff structure. Mozambique has also made progress in modernizing tax administration and implementing laws and procedures consistent with international best practices, especially as regards customs. Release times have improved substantially, and the scope of preshipment inspection has been limited to commodities identified as sensitive.

Main challenges

54. Important remaining administrative inefficiencies increase the effective marginal rates of Mozambique’s tax system. Customs administration, which still depends heavily on physical controls, needs further automation. However, equipment and facilities are in short supply at most remote frontier locations (World Trade Organization, 2004). Delays in the civil service reform and in the development of a career system for civil servants are having detrimental effect on the operations of the VAT specialized unit, whose officers are leaving to go to work to the private sector. Important delays in VAT refunds, which are straining the cash-flow of private firms in a country where the cost of capital is already high, are increasing the incentives to operate in the informal sector (De Barros, 2004).

55. Mozambique’s tax ratio remains low compared with that of other sub-Saharan African countries (Table 6). This points to a narrow base due to generous tax exemptions and incentives, especially for megaprojects, and a high rate of noncompliance, as evidenced by the low productivity of the VAT revenue. In addition, the estimated gap between potential and actual tax collections of the three most important taxes (income taxes, import duties, and the VAT) in Mozambique amounted to 12 percent of GDP in 2002-03 (Schenone, 2004). Close to ¾ of 1 percent (8 percent of GDP) of the gap can be attributed to taxpayer noncompliance, which is especially high for the VAT (Table 7).

Table 6.Government Total Revenues in Selected East African countries, 1996-2005(In percent of GDP)
199619992000-02200320042005

Proj.
Botswana42.846.343.240.942.143.6
Kenya27.624.922.120.721.621.0
Rwanda9.310.411.113.513.313.3
Tanzania11.910.710.911.412.212.9
Uganda10.511.611.812.112.612.8
Sub-Saharan Africa20.321.422.321.823.324.1
Mozambique10.812.012.612.912.313.2
Sources: IMF, African Department data base, March 2005, World Economic Outlook, 3/3 3/31/2005; Mozambican authorities; and IMF staff estimates
Sources: IMF, African Department data base, March 2005, World Economic Outlook, 3/3 3/31/2005; Mozambican authorities; and IMF staff estimates
Table 7.Mozambique: Potential and Actual Revenue, 2002-03(In percent of GDP, unless otherwise specified)
20022003 1/
PotentialActualPotentialActualPotentialActualPotentialActual
RevenueRevenueDifferenceRevenueRevenueDifferenceRevenueRevenueDifferenceRevenueRevenueDifference
(Millions of meticais)(In percent of GDP)(Millions of meticais)(In percent of GDP)
Personal income tax2674130013742.81.31.43117172913882.71.51.2
Noncompliance13741388
Corporate Income Tax217581613592.20.81.43202128119212.81.11.7
Noncompliance8960.913771.2
Exemptions4630.55440.5
Of which MOZAL1420.11660.1
Value added tax128754588828813.34.78.6146505366928412.94.78.2
Noncompliance59966.264395.7
Exemptions22922.428442.5
Tax on international trade252518516742.61.90.73271222910422.92.00.9
Noncompliance1780.24230.4
Exemptions1730.22390.2
Smuggling3230.33800.3
Total2024985541169520.98.812.124239106051363521.39.312.0
Noncompliance84438.796278.5
Exemptions29283.036283.2
Smuggling3230.33800.3
Source: Schenone, O., 2004

Extrapolated estimations for 2002 based on Schenone (2004) calculations.

Source: Schenone, O., 2004

Extrapolated estimations for 2002 based on Schenone (2004) calculations.

56. Actions to enforce tax compliance are not systematically organized and managed (Castro, 2005). Neither the DGI, the domestic tax authority, nor the DGA, the customs authority, have put in place a permanent enforcement program. In addition, the DGI’s registration, arrears collection, and audit sections are understaffed, and accountability is weak because responsibilities for initiatives to enhance enforcement are fragmented and not well-established across units. An adequate information and technology tool to assess risks and cross-check tax information is still to be introduced.37 There are no targets to evaluate the performance of debt collection programs. No data are routinely collected on the stock of tax arrears, the number of enforcement actions taken, and the amount of taxes recovered through these actions. Collection officers lack the skills to assert their enforcement authority.

F. Conclusions and Recommendations

57. Although Mozambique has succeeded in establishing a well-crafted tax system, the system has to date generated relatively low revenues. This seems to be mainly the result of the narrow tax base, which has been eroded by generous tax exemptions and incentives, and poor tax enforcement. Over the medium-term, and with continued donor supports, this calls for the need of a revaluation of Mozambique’s system of tax exemptions and incentives, and the strengthening of the human and technical resources and coordination between the custom and domestic tax authority, with a view of establishing the Central Revenue Authority. In the short-term, the Mozambican authorities are implementing the following measures to strengthen tax enforcement capacity:

  • Raising the overall rate of compliance for large tax-payers by strengthening the existing units devoted to this group of tax-payers by broadening the scope of their mandate from merely collecting taxes to controlling the compliance of large taxpayers. This change in approach requires the recruitment of different types of customs officers, a large investment in training, and renewed efforts to retain skilled tax officers.
  • Strengthening tax enforcement, especially of domestic taxes, by enhancing the accountability of the existing units at the DGI in charge of identifying unregistered taxpayers, controlling the late filling of tax returns and late payment of taxes, detecting underreporting of taxes, and collecting tax arrears. In addition, these units should be enlarged and adequately staffed. There is also a need to improve the skills of collections officers to enable them to assert their enforcement powers.
  • Speeding up the full automatization and computerization of tax and customs collections. Efforts are focusing on making fully operational (i) the computerized system of collection of the CIT and PIT; and (ii) the link between the customs and VAT unit databases. These two steps will make it possible to assess and cross-check information on taxpayers’ compliance on a regular basis, and expedite VAT refunds.
G. References

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    CoelhoI.P. dosSantosA.TeixeiraJ. Amaral Tomas and R.Varsano2001Mozambique. Toward a Reform of the Tax System and Tax AdministrationTechnical Assistance Report Fiscal Affairs DepartmentWashington DCInternational Monetary Fund

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    Enterplan2004Mozambique Evaluation of Multi-donor Tax ReformNovember2004Department for International Development.

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    HubbardM.2005Changing Customs: Lessons from Mozambique,presentation at Christian Michelsen InstituteFebruary172005.

    International Bureau of Fiscal Documentation2004Africa Tax Systemedited byElizabethde Braw.

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    GoormanA.R.Sab and P.Ramos2000Moçbique: Racionalização dos Incentivos FiscaisTechnical Assistance Report Fiscal Affairs DepartmentWashington DCInternational Monetary Fund.

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    NicholsonKB.O’LaughlinA.Francisco and V.Nhate2003Fuel Tax in Mozambique Poverty and Social Impact AnalysisWashington D.CWorld Bank.

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    SchenoneO.2004Mozambique: A Methodology for Tax Revenue Estimation, Preliminary Version reflecting Provisional Data and Subject to Revision, for Purposes of Illustrating the Methodologies for Estimating Revenue,Technical Assistance Report from the Fiscal Affairs DepartmentWashington DCInternational Monetary Fund.

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    TheodossiadisL. (2004) Tax Reform and Macroeconomic Stabilization in Mozambique (master’s thesis, School of Economics and Management, Lund University).

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Statistical Appendix Tables
Table 1.Mozambique: Gross Domestic Product, 1999-2004 1/
19992000200120022003 Prel.2004 Prel.
(In billions of meticais)
Total consumption44,99551,94270,76086,738103,455122,616
Private consumption40,07246,04463,09977,36991,682108,694
Public consumption4,9235,8987,6609,36911,77313,922
Total domestic investment19,04119,57519,81828,90429,50927,583
Public investment6,0016,06011,80812,14913,36212,543
Private investment13,04013,5158,01016,75516,14715,040
Domestic demand64,03571,51790,578115,642132,964150,199
Exports of goods and nonfactor services7,63011,48920,79228,12932,16641,273
Imports of goods and nonfactor services19,75224,65234,82546,88751,31954,047
GDP51,91358,35576,54596,883113,811137,425
(In percent)
Real rates of change
Private consumption4.6-0.31.50.24.45.0
Public consumption10.011.717.23.611.415.9
Total investment61.4-8.7-15.238.04.4-13.9
Exports of goods and nonfactor services-1.531.951.621.030.213.1
Imports of goods and nonfactor services40.4-2.4-20.721.413.1-7.1
GDP7.51.913.18.27.87.2
Deflators
Private consumption-3.715.335.022.413.513.0
Public consumption13.87.310.818.012.82.0
Investment3.812.619.45.7-2.28.6
Exports57.414.219.411.8-12.213.5
Imports7.527.978.210.9-3.213.4
GDP2.910.316.017.09.012.6
(In percent of GDP)
Total consumption86.789.092.489.590.989.2
Private consumption77.278.982.479.980.679.1
Public consumption9.510.110.09.710.310.1
Total domestic investment36.733.525.929.825.920.1
Public investment11.610.415.412.511.79.1
Private investment25.123.210.517.314.210.9
Domestic demand123.4122.6118.3119.4116.8109.3
Exports of goods and nonfactor services14.719.727.229.028.330.0
Imports of goods and nonfactor services38.042.245.548.445.139.3
GDP100.0100.0100.0100.0100.0100.0
Sources: Mozambican authorities; and IMF staff estimates.

The break in national accounts statistics refers to the revised data produced by the National Institute of of Statistics (INE) versus the data previously compiled by the National Directorate of Planning (DNP). INE’s figures were taken until 2003 and are based as much as possible on the 1993 System of National Accounts; The revision implies a higher nominal GDP and a substantially different mix of demand components. INE’s figures incorporate the results of the 2003 household expenditure and income survey. For 2004, DNP figures were used.

Sources: Mozambican authorities; and IMF staff estimates.

The break in national accounts statistics refers to the revised data produced by the National Institute of of Statistics (INE) versus the data previously compiled by the National Directorate of Planning (DNP). INE’s figures were taken until 2003 and are based as much as possible on the 1993 System of National Accounts; The revision implies a higher nominal GDP and a substantially different mix of demand components. INE’s figures incorporate the results of the 2003 household expenditure and income survey. For 2004, DNP figures were used.

Table 2.Mozambique: Savings and Investment, 1999-2004
19992000200120022003 Prel.2004 Prel.
(In billions of meticais)
Gross domestic savings (GDS) 1/6,9196,4125,78510,14610,35614,808
Public sector193-51-729-1,090-1,310-1,757
Private sector6,7256,4636,51411,23511,66716,565
Net factor income from abroad 2/
and net unrequited transfers5112,166-1,193-490827-369
Net factor income-2,710-3,572-6,303-4,097-4,700-7,678
Net unrequited transfers3,2215,7385,1103,6075,5277,309
Gross national savings (GNS) 3/7,4298,5784,5929,65511,18314,439
Public sector5,4224,2268,9757,9708,5807,298
Private sector2,0074,352-4,3821,6862,6037,141
Foreign savings 4/-9,111-7,555-8,858-12,860-10,453-7,950
Gross domestic savings19,04119,57519,81828,90429,50927,583
Gross domestic investment19,04119,57519,81828,90429,50927,583
Public sector6,0016,06011,80812,14913,36212,543
Private sector13,04013,5158,01016,75516,14715,040
(In percent of GDP)
GDS 1/13.311.07.610.59.110.8
Public sector0.4-0.1-1.0-1.1-1.2-1.3
Private sector13.011.18.511.610.312.1
Net factor income from abroad 2/
and net unrequited transfers1.03.7-1.6-0.50.7-0.3
Net factor income-5.2-6.1-8.2-4.2-4.1-5.6
Net unrequited transfers6.29.86.73.74.95.3
GNS 3/14.314.76.010.09.810.5
Public sector10.47.211.78.27.55.3
Private sector3.97.5-5.71.72.35.2
Foreign savings 4/-17.5-12.9-11.6-13.3-9.2-5.8
Gross domestic savings36.733.525.929.825.920.1
Gross domestic investment36.733.525.929.825.920.1
Public sector11.610.415.412.511.79.1
Private sector25.123.210.517.314.210.9
Memorandum items:
GDP (In billions of meticais)51,91358,35576,54596,883113,811137,425
Total consumption44,99551,94270,76086,738103,455122,616
Sources: Mozambican authorities; and IMF staff estimates.

GDS = GDP - total consumption = gross investment + exports of goods and nonfactor services - imports of goods and nonfactor services.

Current budgetary revenue less current budgetary expenditure net of factor income from abroad.

GNS = GDS + net factor income from abroad + net unrequited transfers.

External current account, including grants.

Sources: Mozambican authorities; and IMF staff estimates.

GDS = GDP - total consumption = gross investment + exports of goods and nonfactor services - imports of goods and nonfactor services.

Current budgetary revenue less current budgetary expenditure net of factor income from abroad.

GNS = GDS + net factor income from abroad + net unrequited transfers.

External current account, including grants.

Table 3.Mozambique: Availability and Uses of Resources, 1999-2004
19992000200120022003 Prel.2004 Prel.
(In percent of GDP)
1. GDP at market prices100.0100.0100.0100.0100.0100.0
2. Resource gap 1/23.422.618.319.416.89.3
3. Domestic demand (current sources = current uses) 2/123.4122.6118.3119.4116.8109.3
4. Total consumption86.789.092.489.590.989.2
Public consumption9.510.110.09.710.310.1
Private consumption77.278.982.479.980.679.1
5. Total domestic savings36.733.525.929.825.920.1
Public savings10.47.211.78.27.55.3
Private savings26.226.314.221.618.414.8
6. Foreign savings 3/-17.5-12.9-11.6-13.3-9.2-5.8
7. Total domestic investment36.733.525.929.825.920.1
Public investment11.610.415.412.511.79.1
Private investment25.123.210.517.314.210.9
Sources: Tables 1 and 2.

Imports of goods and nonfactor services minus exports of goods and nonfactor services.

(3) = (1) + (2) = (4) + (5).

External current account, including grants..

Sources: Tables 1 and 2.

Imports of goods and nonfactor services minus exports of goods and nonfactor services.

(3) = (1) + (2) = (4) + (5).

External current account, including grants..

Table 4.Mozambique: Composition of GDP, 1999-2004
19992000200120022003 Prel. Act.2004 Est.
(In billions of meticais)
Agriculture13,23112,32215,46320,12022,23532,106
Fishing1,3101,3821,4491,4871,6312,849
Industry11,53413,99419,40223,29731,54637,574
Mining731822162823042,535
Manufacturing5,9936,98710,43811,66713,37019,274
Electricity and water1,4471,7392,4783,6464,4402,589
Construction4,0215,0876,2707,70213,43213,176
Services25,42430,34440,71152,54459,25064,629
Commerce10,99711,99416,77123,23524,96127,523
Repair services4045007508568891,686
Restaurants and hotels6267461,0741,2191,4681,306
Transport and communication4,9246,0878,30210,99313,94313,189
Financial services1,0452,3252,8413,7033,6683,760
Real estate rentals1,1461,1291,1641,1861,4092,301
Corporate services4144144144144141,542
Government services3,5844,3235,6136,8388,3955,638
Other services2,2842,8263,7824,1014,1037,684
Import rights and services of financial intermediation414313-480-564-852266
GDP51,91358,35576,54596,883113,811137,425
(In percent of GDP)
Agriculture25.521.120.220.819.523.4
Fishing2.52.41.91.51.42.1
Industry22.224.025.324.027.727.3
Mining0.10.30.30.30.31.8
Manufacturing11.512.013.612.011.714.0
Electricity and water2.83.03.23.83.91.9
Construction7.78.78.27.911.89.6
Services49.052.053.254.252.147.0
Commerce21.220.621.924.021.920.0
Repair services0.80.91.00.90.81.2
Restaurants and hotels1.21.31.41.31.31.0
Transport and communication9.510.410.811.312.39.6
Financial services2.04.03.73.83.22.7
Real estate rentals2.21.91.51.21.21.7
Corporate services0.80.70.50.40.41.1
Government services6.97.47.37.17.44.1
Other services4.44.84.94.23.65.6
Import rights and services of financial intermediation0.80.5-0.6-0.6-0.70.2
GDP100.0100.0100.0100.0100.0100.0
(Annual percentage change)
Real rates of change 2/
Agriculture6.5-10.813.08.57.27.1
Fishing-1.99.59.0-4.313.4-3.8
Industry18.611.819.723.92.338.8
Mining-6.552.812.466.234.5215.7
Manufacturing14.720.327.24.014.39.6
Electricity and water78.3-6.113.96.2-27.910.7
Construction3.44.79.760.810.3-2.0
Services5.16.411.5-1.06.05.7
Commerce2.52.45.51.15.2-0.6
Repair services3.23.512.73.62.00.0
Restaurants and hotels5.46.419.13.310.31.1
Finance and insurance-26.941.99.29.40.80.9
Real estate and lending to enterprises2.2-2.85.72.52.52.2
Transport and communications9.01.221.6-12.89.016.4
Financial services-26.941.99.29.40.80.9
Real estate rentals2.2-2.85.72.52.52.2
Corporate services4.4-0.111.911.92.42.2
Government services15.16.715.8-2.06.49.4
Other services10.010.510.36.25.48.4
Import rights and services of financial intermediation-15.313.5-77.214.16.5133.8
GDP7.51.913.18.27.87.2
(In percent)
Deflators
Agriculture-2.67.213.416.11.44.4
Fishing-5.60.74.21.55.114.5
Industry-0.15.713.310.229.77.7
Mining-45.255.57.01.53.9-26.5
Manufacturing2.21.310.92.80.93.4
Electricity and water-13.531.129.733.317.212.1
Construction-0.111.915.510.963.019.6
Services7.112.117.619.53.822.9
Commerce6.45.618.232.32.643.4
Repair services6.221.947.212.02.30.1
Restaurants and hotels11.311.638.57.910.210.7
Transport and communications5.020.427.622.210.913.8
Financial services13.223.10.712.6-10.17.9
Real estate rentals2.6-3.62.41.59.07.2
Corporate services-28.0-11.116.00.9-0.10.4
Government services15.512.113.4-6.02.27.2
Other services6.821.04.90.10.114.7
Import rights and services of financial intermediation9.66.412.54.74.321.9
GDP3.09.715.716.88.714.0
Sources: Mozambican authorities; and IMF staff estimates.

Data through 2003 correspond to official data released by the National Institute of Statistics; 2004 data are IMF staff estimates based on data from the Ministry of Finances.

Volume growth rates based on growth of value at previous year’s prices.

Sources: Mozambican authorities; and IMF staff estimates.

Data through 2003 correspond to official data released by the National Institute of Statistics; 2004 data are IMF staff estimates based on data from the Ministry of Finances.

Volume growth rates based on growth of value at previous year’s prices.

Table 5.Mozambique: Production of Major Marketed Crops, 1999/2000-2003/04
1999/20002000/012001/022002/032003/04 Prel.
(In thousands of tons)
Export crops571.2518.41,012.52,225.75,888.4
Cotton35.471.083.054.163.4
Copra44.029.645.732.736.4
Tea (leaf)10.59.012.617.612.3
Sugarcane417.3333.9784.02,033.55,695.0
Cashew nuts50.465.663.263.856.2
Citrus13.59.224.024.025.2
Basic food crops6,897.93,208.54,232.07,360.97,650.2
Wheat1,019.0180.893.4117.5128.6
Rice141.0150.1168.0166.4183.6
Sorghum4.43.44.34.34.9
Cassava5,400.02,496.23,555.36,547.36,756.8
Peanuts114.0109.0110.0110.8116.8
Beans146.0154.0177.0202.3221.3
Vegetables54.590.5116.5199.0207.1
Onions9.07.67.610.231.0
Industrial inputs22.923.951.6126.7134.3
Tobacco9.511.225.640.217.0
Mafurra0.30.10.10.30.1
Tomatoes12.46.122.482.3113.3
Sunflowers0.76.53.53.94.0
(In billions of meticais, unless otherwise indicated)
Export crops528.0650.71,483.81,900.22,816.8
Cotton112.0227.2265.6121.0367.7
Copra74.850.477.8138.3122.5
Tea (leaf)10.59.012.62.92.2
Sugarcane58.499.3233.2760.41,281.2
Cashew nuts231.3235.9220.8222.7293.8
Citrus41.028.9673.8654.9749.5
Basic food crops1,037.911,987.312,191.815,505.317,617.2
Maize1,528.51,714.51,854.0202.1246.8
Rice377.5417.5420.01,017.11,138.2
Sorghum10.713.1
Cassava7,808.48,639.98,567.612,232.013,633.3
Peanuts513.0490.5495.0572.9652.1
Beans481.8508.2584.1743.3878.2
Vegetables114.1189.5243.9611.3675.8
Onions32.427.227.2116.1379.7
Industrial inputs173.1186.8432.8
Sisal
Tobacco124.7147.1337.2
Mafurra
Tomatoes46.522.984.1
Sunflowers1.816.811.5
Total production1,739.012,824.814,108.416,750.619,192.2
Memorandum items: Official exchange rate (in meticais per US dollar)12,67315,14120,45623,18023,341
Total production (in millions of U.S. dollars) 1/137.2847.0689.7722.6822.3
Source: Ministry of Finance.

Market exchange rates used for all crop years.

Source: Ministry of Finance.

Market exchange rates used for all crop years.

Table 6.Mozambique: Prices of Major Marketed Crops, 1999/2000-2003/04
1999/20002000/012001/022002/032003/04
(In thousands of meticais per ton)
Export crops
Cotton4,3234,17949,29769,5265,801
Copra2,2972,2212,6673,0483,362
Tea (leaf)125121142163179
Sugar182161179204225
Cashew nuts4,4794,2314,1464,7395,227
Basic food crops
Maize1,4861,3672,4001,7201,919
Rice2,7182,7424,3706,0006,200
Sorghum2,3442,3662,6612,5022,702
Cassava1,5721,5871,8411,8682,018
Peanuts5,0605,2865,1825,1725,586
Citrus3,0373,14428,07427,28829,798
Beans3,7914,0453,8553,6743,968
Vegetables2,7313,3073,6573,0723,262
Onions5,8388,79510,69411,33612,232
Other crops
Sisal
Tobacco17,82217,14017,43220,48225,378
Mafurra466470470470470
Tomatoes4,5385,0954,2392,5142,652
Sunflowers2,9623,2602,1302,8003,260
(Annual percentage changes, unless otherwise indicated)
Export crops
Cotton35.0-3.31,079.741.0-91.7
Copra35.0-3.320.114.310.3
Tea (leaf)35.7-3.317.914.310.3
Sugar23.8-11.410.914.110.2
Cashew nuts1.7-5.5-2.014.310.3
Basic food crops
Maize-1.1-8.075.6-28.311.5
Rice8.60.959.337.33.3
Sorghum9.40.912.5-6.08.0
Cassava8.70.916.01.58.0
Peanuts12.34.5-2.0-0.28.0
Citrus11.03.5793.0-2.89.2
Beans14.86.7-4.7-4.78.0
Vegetables30.421.110.6-16.06.2
Onions62.050.721.66.07.9
Other crops
Tobacco35.2-3.81.717.523.9
Mafurra-3.80.90.00.00.0
Tomatoes20.912.3-16.8-40.75.5
Sunflowers13.810.1-34.731.516.4
Sources: Ministry of Agriculture; and Ministry of Finance.
Sources: Ministry of Agriculture; and Ministry of Finance.
Table 7.Mozambique: Marketed Livestock, 1998-2003
199819992000200120022003
Production volume(In units stated)
Beef (in tons)1,1401,3501,55410,34218,82328,335
Pork (in tons)29633125074,72268,44852,050
Chicken (in tons)4,6235,2154,50611,63410,55510,377
Eggs (in thousands)5,2006,5793,5904,4414,7424,923
Milk (in thousands of liters)7448961,3031,4424,3273,591
Production value(In millions of meticais)
Beef16,29617,50122,214147,8391,118,9141,772,496
Pork4,2316,4143,5741,068,1512,852,0232,342,250
Chicken59,79481,69758,281150,474131,467139,849
Eggs3,3644,1002,3232,8737,98211,815
Milk2,2793,2683,9914,41731,35437,106
Total85,965112,98090,3831,373,7544,141,7414,303,515
Average prices(In units stated)
Beef 1/14,29514,29514,29514,29559,44462,555
Pork 1/14,29514,29514,29514,29541,66745,000
Chicken 1/12,93412,93412,93412,93412,45513,477
Eggs 2/6476476476471,6832,400
Milk 3/3,0633,0633,0633,0637,24610,334
Sources: Ministry of Agriculture; and Ministry of Finance.

Meticais per kilogram.

Meticais per unit.

Meticais per liter.

Sources: Ministry of Agriculture; and Ministry of Finance.

Meticais per kilogram.

Meticais per unit.

Meticais per liter.

Table 8.Mozambique: Industrial Production by Branch, 1998-2003
199819992000200120022003
(In billions of meticais)
Industry and fisheries8,1249,04211,81122,68426,37635,266
Fisheries1,8031,6921,6311,5731,5171,463
Mining2762052452811,178228
Manufacturing4,7595,2817,86619,80822,61732,483
Food processing1,2021,2981,2951,5352,0772,577
Processed animal feed
Tea, and cashew nuts37363783747551,397
Beverages1,6252,3092,5443,2093,7694,773
Tobacco128134205167374581
Textiles20974455080164
Clothing202940484380
Leather and furs221110
Footwear3922258
Wood and cork2517111311
Furniture242946383427
Paper139134131151189217
Chemical products574441491214
Other chemicals211224262245283283
Oil refineries76811109
Rubber1515889981217
Plastics121716162850
Glass242419161210
Other nonmetallic mineral products4855647548111,0011,119
Metalworking (iron and steel)7635671015
Metalworking (noniron)5243320
Metallurgy (except machinery)85661,80712,80013,63920,874
Of which: aluminum1,72212,70513,53919,067
Nonelectrical machinery112110
Appliances and electrical machinery201913191835
Transport machinery207132147143256228
Other manufacturing323334
Electricity1,2861,8642,0691,0221,0641,092
GDP46,91251,91358,35576,54596,883113,811
(In percent of GDP)
Industry and fisheries17.317.420.229.627.231.0
Fisheries3.83.32.82.11.61.3
Mining0.60.40.40.41.20.2
Manufacturing10.110.213.525.923.328.5
Food processing2.62.52.22.02.12.3
Processed animal feed,0.00.00.00.00.00.0
Tea, and cashew nuts0.10.10.60.50.81.2
Beverages3.54.44.44.23.94.2
Tobacco0.30.30.40.20.40.5
Textiles0.40.10.10.10.10.1
Clothing0.00.10.10.10.00.1
Leather and furs0.00.00.00.00.00.0
Footwear0.10.00.00.00.00.0
Wood and cork0.10.00.00.00.00.0
Furniture0.10.10.10.00.00.0
Paper0.30.30.20.20.20.2
Chemical products0.10.10.10.10.00.0
Other chemicals0.40.40.40.30.30.2
Oil refineries0.00.00.00.00.00.0
Rubber0.30.10.20.10.00.0
Plastics0.00.00.00.00.00.0
Glass0.10.00.00.00.00.0
Other nonmetallic mineral products1.01.11.31.11.01.0
Metalworking (iron and steel)0.20.10.00.00.00.0
Metalworking (noniron)0.00.00.00.00.00.0
Metallurgy (except machinery)0.20.13.116.714.118.3
Of which: aluminum3.016.614.016.8
Nonelectrical machinery0.00.00.00.00.00.0
Appliances and electrical machinery0.00.00.00.00.00.0
Transport machinery0.40.30.30.20.30.2
Other manufacturing0.00.00.00.00.00.0
Electricity2.73.63.51.31.11.0
Sources: Mozambican authorities; and IMF staff estimates.
Sources: Mozambican authorities; and IMF staff estimates.
Table 9.Mozambique: Transport and Communications Activity, 1998-2003
199819992000200120022003
(In units indicated)
Freight transport
Rail
In millions of ton-kilometers7757226056058021362
In billions of meticais5845384674676471192
Unit tariff 1/679739764764764774
Road
In millions of ton-kilometers175193224224327828
In billions of meticais140193216216474371
Unit tariff 1/80010029649621450448
Maritime
In millions of ton-kilometers11317520394150162
In billions of meticais3761973873235
Unit tariff 1/3304364804034871450
Air
In millions of ton-kilometers677781
In billions of meticais25303231345
Unit tariff 1/420342204410441044104480
Port throughput
In thousands of shipping tons760661186097731282018911
In billions of meticais532671596474747510
Unit tariff 2/707498659892
Oil pipeline throughput
In millions of ton-kilometers356324233234270240
In billions of meticais244227208210397354
Unit tariff 1/68770089589514741474
Total freight receipts 3/156217201616143523732666
Passenger transport
Rail
In millions of passenger-kilometers155145130142138167
In billions of meticais201917191822
Unit tariff 4/129129130130130130
Road
In millions of passenger-kilometers261142689036681270292237132847
In billions of meticais1995318240293521682213697
Unit tariff 4/7879110130305417
Air
In millions of passenger-kilometers3123603782724087
In billions of meticais3343853213214809
Unit tariff 4/10701070849117711771270
Maritime
In millions of passenger-kilometers6729109
In billions of meticais44342014
Unit tariff 4/70017371515169720191575
Total passenger receipts 3/2353358943703864734013742
Communications receipts 3/92511117482489268125
Total transport and communications receipts 3/3278370161186353275464
Source: Mozambican authorities.

Meticais per ton-kilometer.

In millions of meticais per ton.

In billions of meticais.

Meticais per passenger-kilometer.

Source: Mozambican authorities.

Meticais per ton-kilometer.

In millions of meticais per ton.

In billions of meticais.

Meticais per passenger-kilometer.

Table 10.Mozambique: Maputo Consumer Price Index, December 1998-March 2005
Consumer Price Index (CPI) 1/ December 1998=100)Monthly Percentage ChangesAccumulated in Year (In percent)Annual Percentage Changes 2/Annual Percentage Changes (Period average) 3/
1998 December1001.2-1.0-1.01.9
1999 December1065.26.26.22.6
2000 January106-0.3-0.33.12.9
February1147.67.28.43.5
March1162.39.712.14.4
April1181.611.413.15.4
May1190.812.314.56.3
June118-1.210.913.47.1
July1190.711.714.78.0
August117-1.110.414.18.8
September1180.711.115.29.6
October1180.211.316.810.6
November117-1.29.915.711.5
December1181.411.411.412.2
2001 January117-1.0-1.010.712.6
February117-0.2-1.22.712.5
March1180.7-0.61.012.0
April1191.10.50.511.1
May1222.42.92.110.2
June1242.15.15.69.6
July1272.47.77.49.1
August1301.79.510.68.8
September1311.010.610.98.5
October1363.914.915.08.5
November1403.318.620.38.8
December1442.821.921.99.3
2002 January144-0.2-0.222.910.1
February1461.31.124.911.2
March145-0.70.523.212.8
April1450.30.722.214.4
May1460.10.919.515.9
June1471.11.918.317.1
July1491.03.016.618.0
August1490.53.515.218.6
September1500.13.614.318.9
October1500.44.110.518.8
November1531.96.09.018.4
December1582.99.19.117.5
2003 January157-0.3-0.39.116.5
February1612.32.010.115.5
March1652.64.713.714.7
April1671.26.014.814.0
May1701.67.716.513.6
June168-0.86.914.413.2
July1680.06.913.212.8
August1690.67.513.412.6
September1710.78.314.012.5
October1721.09.414.712.5
November1740.910.413.612.7
December1793.113.813.813.1
2004 January1842.92.917.413.7
February1850.53.415.314.2
March1871.04.413.514.5
April1901.35.813.614.5
May1910.66.512.514.3
June191-0.16.413.314.0
July1910.06.413.314.0
August190-0.55.912.013.9
September189-0.25.711.113.7
October1910.66.410.613.4
November1931.17.510.813.1
December1951.59.19.112.8
2005 January1981.51.57.612.3
February198-0.41.16.711.5
March1980.41.56.110.8
Source: Mozambican authorities.

In February 2000, the National Statistics Institute (INE) began compiling a new CPI series with December 1998 as base period. The consumer price index (CPI) was rebased on weights stemming from the 1998 census. The new index was extended backward using the growth rates of the previous CPI.

Compared with same month of previous years.

Monthly average of the previous 12 months.

Source: Mozambican authorities.

In February 2000, the National Statistics Institute (INE) began compiling a new CPI series with December 1998 as base period. The consumer price index (CPI) was rebased on weights stemming from the 1998 census. The new index was extended backward using the growth rates of the previous CPI.

Compared with same month of previous years.

Monthly average of the previous 12 months.

Table 11.Mozambique: Major Consumer Price Index (CPI) Categories, December 1997-December 2004
Weights19971998199920002001200220032004
(December 1998=100)
Total CPI100.00101100106118144157179195
Food, drinks, and tobacco63.46103100102110140151175187
Clothing and footwear4.62991009999118126122125
Firewood and furniture17.01101100126152176190215263
Health2.46971009796104119133134
Transportation and communications4.6386100103142169205232234
Education, recreation, and culture2.7590100117123132145150151
Other goods and services5.07102100104114125136154159
(Annual percentage change)
Total CPI-1.06.011.721.99.113.89.1
Food, drinks, and tobacco-2.92.07.926.98.415.66.8
Clothing and footwear1.0-1.00.319.16.6-3.02.5
Firewood and furniture-1.026.020.415.88.113.222.4
Health3.1-3.0-1.18.314.811.80.6
Transportation and communications16.33.038.018.921.113.50.6
Education, recreation, and culture11.117.05.07.19.83.70.9
Other goods and services-2.04.010.09.58.413.33.3
Source: Mozambican authorities; and IMF staff estimates.
Source: Mozambican authorities; and IMF staff estimates.
Table 12.Mozambique: Minimum Agricultural Producer Prices 1998/99-2003/04 1/
1998/991999/20002000/0120001/022002/032003/04
(In meticais per kilogram)
Cottonseed
Grade I2,3002,5002,7003,0003,8005,000
Grade II1,9502,1002,1002,2003,0003,500
Peanuts 2/4,5474,882
Whole rice3,6304,117
Cashew nuts 3/3,7263,680
Copra 3/1,7891,6712,1022,198
Beans 3/4,2024,0045,104
White maize 2/1,4351,4675,2328,306
Tobacco 2/3/12,75711,92013,99516,183
Beef 2/
Pork 3/
(Annual percentage change)
Cottonseed
Grade I-22.08.78.011.126.731.6
Grade II-25.07.70.04.836.416.7
Peanuts-9.47.4
Whole rice13.4
Cashew nuts-3.2-1.2
Copra-3.2-6.625.84.6
Sunflowers
Mafurra
White maize-4.52.2
Tobacco-3.2-6.6
Memorandum item:
Exchange rate (meticais per U.S. dollar; period12,67315,14120,45623,18023,34123,356
Source: Mozambican authorities.

Prices are set in the fall before the planting season.

All minimum agricultural prices became indicative prices in 1996/97.

Prices were liberalized in 1996/97.

Source: Mozambican authorities.

Prices are set in the fall before the planting season.

All minimum agricultural prices became indicative prices in 1996/97.

Prices were liberalized in 1996/97.

Table 13.Mozambique: Prices of Petroleum Products, Feb. 2000 - Feb. 2005
20002001200220032004200420042004200420042004200420042004200420052005
Oct.Nov.Jan.Dec.Jan.Feb.Mar.MayJun.Jul.Ago.Sep.Oct.Nov.Dec.Jan.Feb.
(In meticais per liter, unless otherwise indicated)
Butane (Kg)9,05013,23413,49414,15215,10315,10315,14015,40015,40015,02614,86114,86113,55913,29013,29012,49814,092
Jet Al6,3336,2606,0479,4069,62510,07010,07010,74111,00911,01811,01711,01711,50011,34411,34410,7269,570
Kerosene5,9005,8405,6208,7108,9109,3509,35010,00010,27010,26010,26010,26011,25010,09010,09010,4508,790
Diesel8,8509,3408,23013,20013,78013,78013,16014,15014,49014,57014,57015,32015,70014,94014,94015,46013,900
Fuel oil 1/4,6386,4705,3998,0377,3197,3317,7888,4228,7468,4148,4148,4148,0618,0617,4486,0244,966
Premium gasoline9,3209,1608,86015,38014,77015,77015,77017,04018,34018,35018,35018,35017,27017,27017,27014,34014,370
Memorandum items:
Representative exchange rate (meticais per U.S. dollar; end of period) 2/16,31923,08023,40223,85723,68823,84023,82923,74723,43623,04822,67422,24421,00920,27518,89918,77718,380
Diesel (U.S. dollars per U.S. gallon)2.21.51.42.52.42.52.52.73.03.13.13.23.23.33.53.03.0
Gasoline (U.S. dollars per U.S. gallon)2.11.51.32.12.22.22.12.32.42.42.52.72.92.93.03.22.9
(Percentage changes, unless otherwise indicated)
Butane (Kg)3.846.22.04.96.70.00.21.70.0-2.4-1.10.0-8.8-2.00.0-6.012.8
Jet Al19.4-1.2-3.455.62.34.60.06.72.50.10.00.04.4-1.40.0-5.4-10.8
Kerosene23.7-1.0-3.855.02.34.90.07.02.7-0.10.00.09.6-10.30.03.6-15.9
Diesel24.55.5-11.960.44.40.0-4.57.52.40.60.05.12.5-4.80.03.5-10.1
Fuel oil 1/4.239.5-16.548.8-8.90.26.28.13.9-3.80.00.0-4.20.0-7.6-19.1-17.6
Premium gasoline0.0-1.7-3.373.6-4.06.80.08.17.60.10.00.0-5.90.00.0-17.00.2
Memorandum items:
Representative exchange rate (meticais per U.S. dollar; end of period) 2/25.541.41.41.9-0.70.60.0-0.3-1.3-1.7-1.6-1.9-5.6-3.5-6.8-0.6-2.1
Diesel (U.S. dollars per U.S. gallon)129.8-30.5-4.670.3-3.76.30.68.69.91.31.34.6-1.84.34.9-14.7-0.6
Gasoline (U.S. dollars per U.S. gallon)6.5-25.4-13.157.34.7-0.4-3.98.14.61.81.310.06.9-0.74.96.3-10.8
Source: Mozambican authorities.

Wholesale price.

The market rate is used.

Source: Mozambican authorities.

Wholesale price.

The market rate is used.

Table 14.Mozambique: Import Prices of Oil Products, 1999-2004 1/(In U.S. dollars per unit indicated)
Products199920002001200220032004
Liquefied petroleum gas (butane) (ton)232.9222.9230.4251.0231.8223.1
Aviation gasoline (cubic meter)266.6
Premium gasoline (cubic meter)186.8219.3171.8185.1221.4287.7
Jet A1 (cubic meter)163.0239.4185.8190.5219.0313.2
Diesel (cubic meter)143.4248.8176.5170.7219.9291.2
Fuel oil (cubic meter)105.3144.1141.9157.0171.7184.1
Sources: Petromoc; International Energy Agency, International Energy Agency Monthly Oil Market Report; and Ministry of Natural Resources and Energy, National Directorate for Energy.

Annual average prices.

Sources: Petromoc; International Energy Agency, International Energy Agency Monthly Oil Market Report; and Ministry of Natural Resources and Energy, National Directorate for Energy.

Annual average prices.

Table 15.Mozambique: Price Structure of Petroleum Products, December 2004
Butane 1/DieselFuel OilGasolineJet AlKerosene
(Meticais per liter)
Cost (c.i.f)5,653.64,252.73,391.32,992.63,783.83,783.8
Customs duties282.7212.6169.6149.6189.2189.2
Import charges393.0239.5234.7239.5239.5239.5
Importer/ distributor’s margin3,612.11,297.61,297.61,297.61,297.61,297.6
Value-added tax1690.01020.4865.8795.50.00.0
Petroleum tax284.01,825.0328.33,307.8430.20.0
Other charges227.0118.6119.73.80.010.6
Wholsale price, net 2/12,142.48,966.46,407.08,786.45,940.35,520.7
Transport differential148.353.853.853.853.853.8
Value-added tax25.29.19.19.10.00.0
Wholsale price, gross12,315.99,029.46,470.08,849.35,994.15,574.5
Retail’s margin784.7265.50.0265.5265.5265.5
Value-added tax133.445.10.045.10.00.0
Calculated retail price, gross13,234.09,340.06,470.09,160.06,259.65,840.0
Memorandum items:
Total taxes2,415.33,112.31,372.94,307.2619.4189.2
Total margins4,396.81,563.11,297.61,563.11,563.11,563.1
Retail price in US$ per liter 3/0.580.410.290.400.280.26
(In percent of retail price)
Margins and taxes51.550.141.364.134.930.0
Wholesale price, net91.896.099.095.994.994.5
Retail price100.0100.0100.0100.0100.0100.0
Memorandum items:
Total taxes18.333.321.247.09.93.2
Total margins33.216.720.117.125.026.8
Total taxes and margins51.550.141.364.134.930.0
Source: Mozambican authorities; and IMF staff estimates.

Meticais per kilogram.

Includes some residual costs.

In the case of butane, U.S. dollars per kilogram.

Source: Mozambican authorities; and IMF staff estimates.

Meticais per kilogram.

Includes some residual costs.

In the case of butane, U.S. dollars per kilogram.

Table 16.Mozambique: Minimum Monthly Wage, April 1997-April 2004 1/
19971998199920002001200220032004
AprilAprilAprilJulyAprilAprilAprilApril
(In units indicated)
Nominal monthly wage (in meticais)
Agricultural worker 2/209,960230,873303,750382,725459,270560,309700,386805,444
Nonagricultural worker311,794353,886450,000568,980665,707812,163982,7171,120,297
Technical/administrative worker311,794353,886450,000568,980665,707785,534982,7171,120,297
Real wage index (April 1998=100)
Agricultural worker94100128143160167184187
Nonagricultural worker91100124139151158169170
Technical/administrative worker91100124139151153169170
Nominal monthly wage (in U.S. dollars)
Agricultural worker1820242423242934
Nonagricultural worker2731363534344147
Technical/administrative worker2731363534334147
Memorandum items:
Consumer price index (CPI) (Dec. 1998=100)97100102119119145167190
Exchange rate (meticais per U.S. dollar; end of period)11,60911,53012,42416,19419,62923,58123,77723,847
(Percentage change)
Nominal monthly wage (in meticais)
Agricultural worker16.610.031.626.02022.025.015.0
Nonagricultural worker15.013.527.226.417.022.021.014.0
Technical/administrative worker15.013.527.226.417.018.025.114.0
Real wage index
Agricultural worker8.46.928.511.211.74.610.41.5
Nonagricultural worker6.910.324.211.68.94.66.90.6
Technical/administrative worker6.910.324.211.68.91.210.50.6
Nominal monthly wage (in U.S. dollars)
Agricultural worker14.210.722.1-3.3-1.01.624.014.7
Nonagricultural worker12.614.318.0-3.0-3.51.620.013.7
Technical/administrative worker12.614.318.0-3.0-3.5-1.824.113.7
Memorandum items:
CPI7.62.92.414.70.522.214.813.6
Exchange rate (meticais per U.S. dollar)2.2-0.77.830.321.220.10.80.3
Sources: Ministry of Finance; and IMF staff estimates.

Months shown refer to time of change.

The minimum wage increase for the year 2002 assumes equal increases for agricultural and nonagricultural workers.

Sources: Ministry of Finance; and IMF staff estimates.

Months shown refer to time of change.

The minimum wage increase for the year 2002 assumes equal increases for agricultural and nonagricultural workers.

Table 17.Mozambique: Expenditure on the Social Sectors as defined in the PARPA, 1999-2004 Prel. 1/
19992000200120022003 Est. 2/2004 Est. 2/
(In billions of meticasi)
Total expenditure (excluding bank restructuring costs and interest payments)12,49114,49322,51723,45628,38530,228
Total actual/budgeted expenditure in PARPA priority sectors6,89510,79413,77415,32318,13819,134
Education1,7953,1414,8744,2175,7346,252
Primary1,4102,7273,8753,6084,8255,310
Postprimary3844141,000610908942
Health1,4932,0382,0802,9533,0093,295
HIV/AIDS0611018885139
Infrastructure development1,4812,4903,6433,8613,9174,142
Roads1,8811,8603,1223,188
Sanitation and public works1,7632,001795953
Agriculture and rural development5839947071,2431,3911,318
Governance and judicial system9911,2441,6151,9002,6682,881
Security and public order7228431,0481,2675391,648
Governance601422442351,590523
Judicial system209258323399539710
Other priority areas 3/5528827459621,1351,121
Social actions69192196211199200
Labor and employment55567411785121
Mineral resources and energy428634475633852801
(In percent of GDP)
Total actual/budgeted expenditure in PARPA priority sectors13.318.518.015.815.913.9
Education3.55.46.44.45.04.5
Primary2.74.75.13.74.23.9
Postprimary0.70.71.30.60.80.7
Health2.74.75.13.74.23.9
HIV/AIDS0.00.00.10.20.10.1
Infrastructure development2.94.34.84.03.43.0
Roads2.51.92.72.3
Sanitation and public works2.32.10.10.1
Agriculture and rural development1.11.70.91.31.21.0
Governance and judicial system1.92.12.12.02.32.1
Security and public order1.41.41.41.30.51.2
Governance0.10.20.30.21.40.4
Judicial system1.92.12.12.02.32.1
Other priority areas 3/1.41.41.41.30.51.2
Social actions0.10.20.30.21.40.4
Labor and employment0.10.30.30.20.20.1
Mineral resources and energy0.10.10.10.10.10.1
(In percent of total expenditure)
Total actual/budgeted expenditure in PARPA priority sectors55.274.561.265.363.963.3
Education14.421.721.618.020.220.7
Primary11.318.817.215.417.017.6
Postprimary3.12.94.42.63.23.1
Health12.014.19.212.610.610.9
HIV/AIDS0.00.00.50.80.30.5
Infrastructure development11.917.216.216.513.813.7
Roads8.47.911.010.5
Sanitation and public works7.88.52.83.2
Agriculture and rural development4.76.93.15.34.94.4
Governance and judicial system7.98.67.28.19.49.5
Security and public order5.85.84.75.41.95.5
Governance0.51.01.11.05.61.7
Judicial system1.71.81.41.71.92.3
Other priority areas 3/4.46.13.34.14.03.7
Social actions0.61.30.90.90.70.7
Labor and employment0.40.40.30.50.30.4
Mineral resources and energy3.44.42.12.73.02.7
Memorandum item:
GDP51,91358,35576,54596,883113,811137,425
Source: Ministry of Finance; and staff estimates.

PARPA stands for National Action Plan for the Reduction of Absolute Poverty, which is Portuguese acronym for the poverty reduction strategy paper (PRSP).

Figures for expenditures in priority sectors are estimated by applying the percentages reported by the authorities to the total expenditures in meticais presented in Table 20.

Relates to expenditures viewed as complementary to PARPA priority areas and which contribute to income generation and employment opportunities.

Source: Ministry of Finance; and staff estimates.

PARPA stands for National Action Plan for the Reduction of Absolute Poverty, which is Portuguese acronym for the poverty reduction strategy paper (PRSP).

Figures for expenditures in priority sectors are estimated by applying the percentages reported by the authorities to the total expenditures in meticais presented in Table 20.

Relates to expenditures viewed as complementary to PARPA priority areas and which contribute to income generation and employment opportunities.

Table 18.Mozambique: Number of Households Receiving Food Subsidy Assistance, June 1999-December 2004
199920002001200220032004
JuneDec.JuneDec.JuneDec.JuneDec.AnnualJuneDec.
Total households38,65639,05140,55848,32457,46766,62573,39485,35380,17768,31667,643
Eligible on account of Malnourished children 1/3,2202,2182,1992,0012,5421,0951,249886545273109
Underweight pregnant women 2/1,5461,5332362631731,306114964233
Destitute elderly 3/31,31231.48632,95639,69546,97954,62461,24468,88370,44858,72361,262
Handicapped 4/7722,5662,9113,4813,7084,1214,5025,0415,0764,2844,407
Households headed by women 5/2,7052,7811,9291,8382,5822,8092,3602,1451,8221,3161,277
Cessantes 6/3271,0461,4832,6703,9258,3022,2443,717585
Sources: Ministry of Finance, Office for Vulnerable Population Initiatives (GAPVU); and National Institute for Social Action (INAS).

Malnourished children up to 5 years of age.

Pregnant women who are underweight relative to their gestation period.

Elderly people without means of subsistence living alone or in households with no wage earners.

Seriously handicapped people over 18 years old living in poverty and unable to earn living.

With more than five children, and chronically ill persons.

Beneficiaries who stopped receiving aid but were attended to in the period.

Sources: Ministry of Finance, Office for Vulnerable Population Initiatives (GAPVU); and National Institute for Social Action (INAS).

Malnourished children up to 5 years of age.

Pregnant women who are underweight relative to their gestation period.

Elderly people without means of subsistence living alone or in households with no wage earners.

Seriously handicapped people over 18 years old living in poverty and unable to earn living.

With more than five children, and chronically ill persons.

Beneficiaries who stopped receiving aid but were attended to in the period.

Table 19.Mozambique: Budget Subsidies to Enterprises, 1999-2004(In millions of meticais, unless otherwise specified)
199920002001200220032004
In percent of totalIn percent of totalIn percent of totalIn percent of totalEst.In percent of totalEst.In percent of total
Agriculture7,30015.23,6006.43,8505.05,2004.04,5003.58,7004.5
Mineral resources1,5003.11,0001.81,2001.68,0006.11,1250.91,5000.8
Coal (Carbomoc)1,5003.11,0001.81,2001.68,0006.11,1250.91,5000.8
Other industries39,10081.651,90591.972,29093.5118,42090.0123,20395.6181,30094.7
Other enterprises4,80010.06,00510.612,12815.725,00019.018,75014.641,40021.6
Information services34,30071.645,90081.260,16277.893,42071.0104,45381.113,9907.3
Total subsidies47,900100.056,505100.077,340100.0131,620100.0128,828100.0191,500100.0
Memorandum items:
GDP (in billions)51,91358,35576,54596,883113,811137,425
Total subsidies as a percent of GDP0.090.100.100.140.110.14
Source: Ministry of Finance.
Source: Ministry of Finance.
Table 20.Mozambique: Government Finances, 1999-2004 1/
199920002001200220032004
(In billions of meticais)
Total revenue6,2077,5359,46912,05714,71416,838
Tax revenue5,7336,8628,40010,62913,62915,598
Taxes on income and profits8671,0341,5192,1163,2363,548
Taxes on goods and services3,6384,3145,1696,4047,7999,416
Taxes on international trade1,0461,2791,4771,8512,2292,284
Other taxes183235235258366350
Nontax revenue4746721,0701,4281,0851,241
Total expenditure and net lending12,81415,55824,57929,03130,18432,607
Current expenditure6,3317,68610,34513,46816,34119,006
Budget year6,3467,80310,40913,49116,11519,006
Compensation to employees2,9953,8174,9466,2067,7349,195
Wages and salaries2,7193,5324,5415,7336,9008,603
Other275286405473834592
Goods and services1,9432,1982,7793,1863,8134,727
Interest on public debt3241094771,2741,3181,321
Domestic6113309521,002910
External31899147322317411
Transfer payments1,0841,6792,2072,8253,2503,763
Local and district governments105224273385417553
Political parties667175137138137
Households6469401,3471,6251,9582,276
Pensions5597501,0191,3271,5681,700
Welfare payments87129176211246287
Other06115387144290
Subsidies to enterprises536969132175208
Abroad214375444547563589
Embassies214339412485489521
International organizations03632627468
Net float 2/-15-117-64-232260
Current balance-124-151-876-1,411-1,627-2,168
Capital expenditure6,0016,06011,80812,14913,36212,543
Budget year5,7826,97311,94912,49212,44912,543
External project grants2,7102,5096,0526,2265,5113,085
External project loans1,3062,4182,1602,6352,7803,564
Locally financed1,7652,0463,1403,1673,6624,074
Special Programs59710001,197
Direct investment364496623
Net float219-913-141-3439120
Net lending4821,8122,4263,4144811,058
Of which: locally financed-61,8122,4261,970-261-79
Unallocated revenue (+)/expenditure (-) 3/-22143-101208-458-310
(In billions of meticais)
Overall balance before grants-6,828-7,980-15,211-16,765-15,928-16,078
Grants received6,0734,57610,52010,02010,84110,053
Project2,7872,1127,0446,7286,6716,185
Nonproject3,2872,4643,4753,2924,1703,868
Overall balance after grants-754-3,404-4,691-6,745-5,087-6,025
External borrowing (net)9102,4383,3095,9394,9944,271
Disbursements1,3942,2683,1085,8865,3486,937
Project1,3941,7241,6242,5122,7803,564
Nonproject05441,4843,3742,5693,373
Cash amortization-483-286-311-485-591-668
HIPC asisstance0455513538237484
Investment abroad 4/-2,482
Domestic financing (net)-1569661,382806931,754
Banking system
Of which: privatization fund000002,482
Other (including residual)
Memorandum items:
Primary current balance 5/200-42-398-137-309-847
Domestic primary balance before grants 6/-1,559-3,900-5,964-5,274-3,710-4,842
Sources: Mozambican authorities; and IMF staff estimates.

Fiscal variables are defined as in Mozambique’s technical memorandum of understanding of the PRGF arrangement, and deviate form the data provided by the General Accountant Office.

Budget procedures in Mozambique allow for a 3-month complementary period, meaning that each year, from January to March, expenses can be incurred in executing the previous year’s budget. Net float corresponds to the expenses incurred from January to March but relate to the previous year’s budget, minus what is left in the budget at the end of the year to be paid during next fiscal year.

Residual discrepancy between identified sources and uses of funds.

Tracks the movements in the government accounts set abroad with the proceeds of the Moatize mine concession.

Current revenue minus noninterest current expenditure.

Total revenue minus noninterest current expenditure minus locally financed capital expenditure and locally financed net lending.

Sources: Mozambican authorities; and IMF staff estimates.

Fiscal variables are defined as in Mozambique’s technical memorandum of understanding of the PRGF arrangement, and deviate form the data provided by the General Accountant Office.

Budget procedures in Mozambique allow for a 3-month complementary period, meaning that each year, from January to March, expenses can be incurred in executing the previous year’s budget. Net float corresponds to the expenses incurred from January to March but relate to the previous year’s budget, minus what is left in the budget at the end of the year to be paid during next fiscal year.

Residual discrepancy between identified sources and uses of funds.

Tracks the movements in the government accounts set abroad with the proceeds of the Moatize mine concession.

Current revenue minus noninterest current expenditure.

Total revenue minus noninterest current expenditure minus locally financed capital expenditure and locally financed net lending.

Table 21.Mozambique: Government Finances, 1999-2004 1/
199920002001200220032004
(In percent of GDP)
Total revenue12.012.912.412.412.912.3
Tax revenue11.011.811.011.012.011.3
Taxes on income and profits1.71.82.02.22.82.6
Taxes on goods and services7.07.46.86.66.96.9
Taxes on international trade2.02.21.91.92.01.7
Other taxes0.40.40.30.30.30.3
Nontax revenue0.91.21.41.51.00.9
Total expenditure and net lending24.726.732.127.926.523.7
Current expenditure12.213.213.513.914.413.8
Budget year12.213.413.613.914.213.8
Compensation to employees5.86.56.56.46.86.7
Goods and services3.73.83.63.33.43.4
Interest on public debt0.60.20.61.31.21.0
Domestic0.00.00.41.00.90.7
External0.60.20.20.30.30.3
Transfer payments2.12.92.92.92.92.7
Local and district governments0.20.40.40.40.40.4
Political parties0.10.10.10.10.10.1
Households1.21.61.81.71.71.7
Pensions1.11.31.31.41.41.2
Welfare payments0.20.20.20.20.20.2
Other0.00.10.20.10.10.2
Subsidies to enterprises0.10.10.10.10.20.2
Abroad0.40.60.60.60.50.4
Embassies0.40.60.50.50.40.4
International organizations0.00.10.00.10.10.0
Other0.00.00.00.00.00.0
Net float 2/0.0-0.2-0.10.00.20.0
Current balance-0.2-0.3-1.1-1.5-1.4-1.6
Capital expenditure11.610.415.412.511.79.1
Budget year11.111.915.612.910.99.1
External project grants5.24.37.96.44.82.2
External project loans2.54.12.82.72.42.6
Locally financed3.43.54.13.33.23.0
Donor-financed outside budget0.00.00.00.40.40.5
HIPC initiative0.00.00.60.50.50.4
Net float 1/0.4-1.6-0.2-0.40.80.0
Net lending0.93.13.21.50.40.8
Unallocated revenue (+)/expenditure (-) 3/-0.40.1-0.1-1.8-0.4-0.2
Overall balance before grants-13.2-13.7-19.9-17.3-14.0-11.7
Grants received11.77.813.710.39.57.3
Project5.43.69.26.95.94.5
Nonproject6.34.24.53.43.72.8
Overall balance after grants-1.5-5.8-6.1-7.0-4.5-4.4
External borrowing (net)1.84.24.36.14.43.1
Disbursements2.73.94.16.14.75.0
Project2.73.02.12.62.42.6
Nonproject0.00.91.93.52.32.5
Cash amortization-0.9-0.5-0.4-0.5-0.5-0.5
HIPC asisstance0.00.80.70.60.20.4
Investment abroad 4/-1.8
Domestic financing (net)-0.31.71.80.80.11.3
Sources: Mozambican authorities; and IMF staff estimates.

Fiscal variables are defined as in Mozambique’s technical memorandum of understanding of the PRGF arrangement, and deviate form the data provided by the General Accountant Office.

Budget procedures in Mozambique allow for a 3-month complementary period, meaning that each year, from January to March, expenses can be incurred in executing the previous year’s budget. Net float corresponds to the expenses incurred from January to March but relate to the previous year’s budget, minus what is left in the budget at the end of the year to be paid during next fiscal year.

Residual discrepancy between identified sources and uses of funds.

Tracks the movements in the government accounts set abroad with the proceeds of the Moatize mine concession.

Sources: Mozambican authorities; and IMF staff estimates.

Fiscal variables are defined as in Mozambique’s technical memorandum of understanding of the PRGF arrangement, and deviate form the data provided by the General Accountant Office.

Budget procedures in Mozambique allow for a 3-month complementary period, meaning that each year, from January to March, expenses can be incurred in executing the previous year’s budget. Net float corresponds to the expenses incurred from January to March but relate to the previous year’s budget, minus what is left in the budget at the end of the year to be paid during next fiscal year.

Residual discrepancy between identified sources and uses of funds.

Tracks the movements in the government accounts set abroad with the proceeds of the Moatize mine concession.

Table 22.Mozambique: Government Revenue, 1999-2004
199920002001200220032004
(In billions of meticais)
Total revenue6,2077,5359,46912,05714,71416,838
Tax revenue5,7336,8628,40010,62913,62915,598
Taxes on income and profits8671,0341,5192,1163,2363,538
Companies4153725428161,2811,124
Individuals4526629771,3001,9552,413
Taxes on goods and services3,6384,3145,1696,4047,7999,416
Turnover tax917
Value-added tax1,3972,9143,5724,5885,3666,434
On domestic production5721,2011,6291,9672,3632,639
On imports8251,7131,9432,6213,0043,795
Consumption taxes5656297739521,1281,319
Tobacco4691143162183228
Beer and soft drinks269326378470535597
Other domestic goods1851331
Imported products231208250317407492
Tax on petroleum products7597718248651,3051,663
Taxes on international trade1,0461,2791,4771,8512,2292,284
Other taxes183235235258366360
Stamp taxes92112123139173204
Poll taxes345666
Other taxes and duties 1/88120108114187150
Nontax revenue4746721,0701,4281,0851,241
Rents from real estate1110011010283
Fees and charges50627178196116
Social security contributions112168203278306408
Nonfinancial enterprise profits06112811486
Fishing license fees60589891051
Net privatization revenue1710034129400
Custom fess1310
Royalties1143
Other nontax revenues124278346549366498
(In percent of total revenue)
Total revenue100.0100.0100.0100.0100.0100.0
Tax revenue92.491.188.788.292.692.6
Taxes on income and profits14.013.716.017.522.021.0
Taxes on goods and services58.657.354.653.153.055.9
Taxes on international trade16.917.015.615.415.113.6
Other taxes2.93.12.52.12.52.1
Nontax revenue7.68.911.311.87.47.4
Sources: Mozambican authorities; and IMF staff estimates.

Includes the tax on vehicles introduced in 2003.

Sources: Mozambican authorities; and IMF staff estimates.

Includes the tax on vehicles introduced in 2003.

Table 23.Mozambique: Locally Financed Public Investment by Sector, 1999-2004
199920002001200220032004 Prel.
(In billion of meticais)
Total locally financed expenditure1,7652,0463,1403,1673,6624,074
Total in priority sectors7591,2681,7011,3912,3122,500
Education118225198162354445
Primary82185139106269349
Secondary364059568596
Health5511218292183200
HIV/AIDS0057695060
Infrastructure4146758577851,0511,148
Roads713624795838
Water and public workds144161256309
Agriculture and rural development46768158183138
Governance, security, and judicial system93131236168379394
Security and public order3146595472100
Governance, security, and judicial system30448564178135
Judicial system33429150129159
Other priority sectors33509157112116
Social action8428172226
Employment37731817
Mineral resources and energy223955377273
Memorandum item:
GDP51,91358,35576,54596,883113,811137,425
(In percent of GDP)
Total locally financed expenditure3.43.54.13.33.23.0
Total in priority sectors1.52.22.21.42.01.8
Education0.20.40.30.20.30.3
Primary0.20.30.20.10.20.3
Secondary0.10.10.10.10.10.1
Health0.10.20.20.10.20.1
HIV/AIDS0.00.00.10.10.00.0
Infrastructure0.81.21.10.80.90.8
Roads0.90.60.70.6
Water and public workds0.20.20.20.2
Agriculture and rural development0.10.10.10.10.20.1
Governance, security, and judicial system0.20.20.30.20.30.3
Security and public order0.10.10.10.10.10.1
Governance, security, and judicial system0.10.10.10.10.20.1
Judicial system0.10.10.10.10.10.1
Other priority sectors0.10.10.10.10.10.1
Social action0.00.00.00.00.00.0
Employment0.00.00.00.00.00.0
Mineral resources and energy0.00.10.10.00.10.1
(As a percentage of total locally financed expenditure)
Total locally financed expenditure100.0100.0100.0100.0100.0100.0
Total in priority sectors43.062.054.243.963.161.4
Education6.711.06.35.19.710.9
Primary4.79.04.43.47.38.6
Secondary2.12.01.91.82.32.4
Health3.15.45.82.95.04.9
HIV/AIDS0.00.01.82.21.41.5
Infrastructure23.533.027.324.828.728.2
Roads22.719.721.720.6
Water and public workds4.65.17.07.6
Agriculture and rural development2.63.72.61.85.03.4
Governance, security, and judicial system5.36.47.55.310.39.7
Security and public order1.72.21.91.72.02.5
Governance, security, and judicial system1.72.12.72.04.93.3
Judicial system1.82.02.91.63.53.9
Other priority sectors1.92.52.91.83.12.8
Social action0.40.20.90.50.60.6
Employment0.20.30.20.10.50.4
Mineral resources and energy1.21.91.81.22.01.8
Source: Mozambican authorities.
Source: Mozambican authorities.
Table 24.Mozambique: Monetary Survey, December 1999-December 2004
199920002001200220032004
Dec.Dec.Dec.Dec.Dec.Mar.Jun.Sep.Dec.
Central bank
Net foreign assets-1,384-991,7643,9357,1046,6856,75718,88719,184
(in millions of U.S. dollars)-104-6761652982822948831,015
Net international reserves 1/6,2429,01512,38414,90217,60617,58317,18517,89518,141
(in millions of U.S. dollars)469526531625738740747837960
Medium- and long-term foreign liabilities 2/-7,819-9,357-10,964-11,457-11,806-12,133-11,280-61-57
Other1932433444891,3041,2358521,0531,100
Net domestic assets4,5014,0394,2933,1981,5781,1851,919-9,760-8,750
Credit to government (net)-5,175-5,433-4,581-4,489-5,961-5,117-5,006-5,700-8,925
Credit to banks (net)408483476-2,222-3,208-5,280-5,095-6,318-3,859
Credit to the economy7411111111
Other items (net; assets +)9,1948,9898,3979,90910,74611,58212,0192,2584,033
Reserve money3,1173,9406,0567,1328,6827,8708,6769,12610,433
Currency outside banks2,1742,4252,9703,4864,2593,7584,2334,5185,225
Bank reserves9431,5153,0863,6474,4234,1124,4434,6085,209
Currency in banks391428610612752588624568978
Deposits5521,0872,4763,0343,6713,5253,8194,0404,231
Deposit money banks
Net foreign assets1,9974,1696,0048,1337,3085,6216,5595,3664,900
(in millions of U.S. dollars)150243257341306237285251259
Net domestic assets7,79410,46213,38215,54820,69021,78922,35423,04324,050
Banks’ reserves9831,5153,0863,6474,4234,1124,4434,6085,209
Central bank liabilities w/coml. banks (net)-313-966-6382,1233,4725,5545,3966,5504,009
Credit to government (net)-3815262978562,4202,0001,8991,4084,656
Credit to the economy8,64511,34313,94314,52514,32014,20414,50614,15913,512
Other items (net; assets +)-1,140-1,957-3,307-5,603-3,945-4,082-3,890-3,682-3,336
Deposits9,79114,63219,38523,68227,99827,41028,91328,40928,950
Demand and savings deposits7,29310,77514,03416,19918,90118,16018,93418,34719,255
Time deposits2,4983,8575,3517,4839,0979,2509,97910,0619,695
Monetary survey
Net foreign assets6144,0707,76812,06814,41212,30613,31624,25324,084
Net domestic assets11,35212,98714,58815,10017,84518,86119,8308,67410,091
Domestic credit3,1646,4379,66010,89310,77911,08811,3999,8679,244
Credit to government (net)-5,556-4,907-4,283-3,633-3,541-3,117-3,107-4,293-4,269
Credit to the economy8,72011,34413,94414,52614,32014,20414,50714,16013,513
Other items (net; assets +)8,1886,5504,9284,2077,0667,7748,431-1,193847
Money and quasi money (M3)11,96517,05722,35627,16732,25731,16733,14632,92734,174
Foreign currency deposits4,1517,1079,89711,54612,84511,95912,50111,75811,522
(in millions of U.S. dollars)312415424484538504543550610
M27,8149,95012,45915,62219,41219,20920,64521,16922,653
Currency outside banks2,1742,4252,9703,4864,2593,7584,2334,5185,225
Domestic currency deposits5,6407,5259,48912,13615,15315,45116,41116,65017,428
Memorandum items:
Broad money (M3) (12-month change in percent)32.542.631.121.518.715.316.411.75.9
M2 (12-month change in percent)30.627.325.225.424.319.121.118.616.7
M3-to-GDP ratio (percent)23.029.229.228.028.322.724.124.024.9
Credit to the economy (12-month change)29.730.122.94.2-1.43.61.1-1.1-5.6
Credit to the economy-to-GDP ratio (percent)16.819.418.215.012.610.310.610.39.8
Currency outside banks-to-M3 ratio (percent)18.214.213.312.813.212.112.813.715.3
Foreign currency deposits-to-M3 ratio (percent)34.741.744.342.539.838.437.735.733.7
Reserve money growth (12 month change in percent)15.826.453.717.821.719.124.525.320.2
Money multiplier (M3/reserve money)3.84.33.73.83.74.03.83.63.3
Velocity (GDP/average M3)4.94.03.93.94.04.64.44.34.2
Sources: Bank of Mozambique; and IMF staff estimates.

The net international reserves program and actual figures for 2004 and the net international reserves actual for 2003 have been revised downward by deducting from gross reserves some deposits held by the central bank abroad which are encumbered for specific imports.

In July 2004, part of the medium- and long-term foreign liabilities of the central bank (11,023.5 billions of meticais or US$489 millions) were transferred to treasury. This account was offset by “other items” in net domestic assets.

Sources: Bank of Mozambique; and IMF staff estimates.

The net international reserves program and actual figures for 2004 and the net international reserves actual for 2003 have been revised downward by deducting from gross reserves some deposits held by the central bank abroad which are encumbered for specific imports.

In July 2004, part of the medium- and long-term foreign liabilities of the central bank (11,023.5 billions of meticais or US$489 millions) were transferred to treasury. This account was offset by “other items” in net domestic assets.

Table 25.Mozambique: Interest Rates, 1999-2004(In percent a year)
Commercial Banks1/Interbank MoneyCentral Bank
DepositLendingMarket 1/Rediscount 2/
1999
Q17.8619.639.769.95
Q27.8619.639.519.95
Q37.8619.639.779.95
Q47.8619.6310.649.95
2000
Q18.7519.4110.749.95
Q29.5618.7315.179.95
Q39.7918.4417.719.95
Q410.6819.5820.889.95
2001
Q113.3620.5021.069.95
Q213.7521.2021.549.95
Q315.1924.2028.369.95
Q417.7625.0229.029.95
2002
Q119.2425.5026.589.95
Q218.9925.5021.159.95
Q317.2026.0816.669.95
Q416.5229.7517.199.95
2003
Q113.7725.5913.739.95
Q212.5524.7913.489.95
Q311.8224.5214.649.95
Q410.4523.8611.509.95
2004
Q110.4523.1610.709.95
Q210.0622.569.969.95
Q39.8021.939.269.95
Q49.3120.669.539.95
Source: Bank of Mozambique.

Quarterly arithmetic average of most representative rate.

End of quarter.

Source: Bank of Mozambique.

Quarterly arithmetic average of most representative rate.

End of quarter.

Table 26.Mozambique: Balance of Payments, 2000-04
20002001200220032004 Prel.
(In millions of U.S. dollars, unless otherwise specified)
Trade balance-799-360-733-697-531
Exports, f.o.b.36470481010441504
Large projects1274414686811049
Other exports237263341363455
Imports, c.i.f.-1163-1063-1543-1741-2035
Large projects-119-231-402-337-312
Other imports-1044-832-1141-1403-1723
Services and incomes (net)-243-605-210-257-312
Receipts405311415358370
Expenditures-648-916-625-614-682
Of which: interest on public debt-161-146-27-26-18
Current account, before grants-1042-965-943-953-843
Unrequited official transfers564504400514491
Current account, after grants-482-462-543-440-352
Capital account31019871433320
Trade credit (net)-129-9443
Foreign borrowing544167802395463
Public 1/222115259236315
Private 2/32252543160148
Amortization-373-403-182-210-303
Public 1/-336-333-61-68-63
Private-38-71-121-142-240
Direct investment (net)139255380342241
Of which: Moatize coal mine123
Other investment of the government 3/-123
Short-term capital and errors and omissions (net)-18099-230129244
Overall balance-351-34398122212
Financing351343-98-122-212
Of which: Bank of Mozambique
gross reserve assets (increase -)-98-82-98-122-212
Of which: net change in arrears (increase: +)00000
debt relief 4/449425000
Memorandum items:
Use of Fund credit (net)31-16-11-9-19
Current account deficit (percent of GDP)
Before grants26.826.123.019.913.8
After grants12.912.513.39.25.8
After grants, excluding large projects8.911.08.310.413.1
Net international reserves526531624738960
Gross international reserves7457278259471,159
In months of imports of G&NFS6.15.25.05.45.8
In months of imports of GNFS, excl. large projects6.76.86.96.86.9
Debt service indicators (in percent) 4/
Debt service due/exports9.16.96.46.14.5
Sources: Mozambican authorities; and IMF staff estimates.

Including IMF.

Private borrowing, not guaranteed by the government or the Bank of Mozambique.

Tracks the movements in the government account set up abroad with the proceeds of the coal mine concession.

Debt relief is incorporated above the line from 2002 so that debt service to official bilateral and commercial creditors reflects what is owed after relief. Debt service to multilaterals is still shown before debt relief, but with HIPC assistance grants a new entry under “unrequited official transfers.”

Sources: Mozambican authorities; and IMF staff estimates.

Including IMF.

Private borrowing, not guaranteed by the government or the Bank of Mozambique.

Tracks the movements in the government account set up abroad with the proceeds of the coal mine concession.

Debt relief is incorporated above the line from 2002 so that debt service to official bilateral and commercial creditors reflects what is owed after relief. Debt service to multilaterals is still shown before debt relief, but with HIPC assistance grants a new entry under “unrequited official transfers.”

Table 27.Mozambique: Foreign Trade Indicators, 2000-04 1/
20002001200220032004
(Indices, 1990 = 100)
Exports
Value288.0556.4640.8826.01190.0
Prices 2/83.877.777.085.4108.1
Volume 3/343.7715.9832.2967.41100.4
Imports
Value149.1136.3197.8223.1260.9
Prices 2/92.588.491.0102.4114.4
Volume 3/161.2154.3217.4218.0228.1
Terms of trade90.687.984.683.494.6
(Annual percentage changes)
Exports
Value28.393.215.228.944.1
Prices 2/7.6-7.3-0.910.926.6
Volume 3/19.2108.316.216.213.8
Imports
Value-3.1-8.645.112.816.9
Prices 2/-0.7-4.53.012.511.7
Volume 3/-2.4-4.340.90.34.6
Terms of trade8.3-2.9-3.8-1.413.4
Source: IMF staff estimates, based on data from the Bank of Mozambique, Instituto Nacional de Estadistica (INE), and IMF.

Values and prices in U.S. dollar terms. From 2002 onward, trade data have been corrected by the authorities to improve coverage and eliminate past data-processing problems.

Average of the export unit value for manufacturers, the petroleum price, and the nonfuel commodity price, weighted by the 2000-02 composition of trade, as reported in the IMF’s World Economic Outlook.

Implicit volume derived from value and prices.

Source: IMF staff estimates, based on data from the Bank of Mozambique, Instituto Nacional de Estadistica (INE), and IMF.

Values and prices in U.S. dollar terms. From 2002 onward, trade data have been corrected by the authorities to improve coverage and eliminate past data-processing problems.

Average of the export unit value for manufacturers, the petroleum price, and the nonfuel commodity price, weighted by the 2000-02 composition of trade, as reported in the IMF’s World Economic Outlook.

Implicit volume derived from value and prices.

Table 28.Mozambique: Commodity Composition of Exports, 2000-04 1/(Value in millions of U.S. dollars)
20002001200220032004
Total exports, f.o.b.364.0703.6809.81043.91503.9
Aluminum60.2383.2361.1567.6915.0
Prawns91.592.4114.275.891.8
Electricity67.057.3107.4113.3102.3
Natural Gas31.3
Cotton25.518.315.932.435.8
Timber14.212.618.020.430.0
Processed cashew nuts8.410.91.11.58.0
Unprocessed cashew nuts11.910.916.27.421.2
Sugar4.38.018.118.838.2
Tobacco21.540.9
Other81.0110.0157.8185.1189.4
Sources: Mozambican authorities.

From 2002 onward, trade data have been corrected by the authorities to improve coverage and eliminate past data-processing problems.

Sources: Mozambican authorities.

From 2002 onward, trade data have been corrected by the authorities to improve coverage and eliminate past data-processing problems.

Table 29.Mozambique: Exports by Country of Destination, 2000-04 1/(In percent of total exports, unless otherwise indicated)
20002001200220032004
OECD countries 2/39.914.961.965.369.7
Belgium0.30.135.743.50.6
Japan4.34.21.80.90.9
Netherlands1.01.02.62.860.9
Portugal11.64.04.93.72.8
Spain10.73.89.46.72.5
United Kingdom0.90.02.52.90.2
United States4.70.91.01.50.6
Other6.40.84.03.31.2
Other countries60.185.138.134.730.3
Malawi3.01.75.03.13.3
South Africa14.615.315.416.212.9
Zimbabwe17.75.36.82.82.3
Other 2/24.862.810.912.611.8
Total100.0100.0100.0100.0100.0
Memorandum item:
Total exports (millions of U.S. dollars)364.0703.6809.81043.91503.9
Source: Mozambican authorities.

From 2002 onward, trade data have been corrected by the authorities to improve coverage and eliminate past data processing problems.

The final destination of exports by Mozambique Aluminum (Mozal) to Organization of Economic Cooperation and Development (OECD) countries is not available. The exports were allocated to Belgium (2002-03), the Netherlands (2004), and “Other” (2001) in official statistics.

Source: Mozambican authorities.

From 2002 onward, trade data have been corrected by the authorities to improve coverage and eliminate past data processing problems.

The final destination of exports by Mozambique Aluminum (Mozal) to Organization of Economic Cooperation and Development (OECD) countries is not available. The exports were allocated to Belgium (2002-03), the Netherlands (2004), and “Other” (2001) in official statistics.

Table 30.Mozambique: Imports by Country of Origin, 2000-04 1/(In percent of total imports, unless otherwise indicated)
20002001200220032004
OECD countries 2/32.628.634.434.428.0
Australia4.06.77.812.10.1
France2.21.12.02.01.7
Japan4.60.65.81.70.8
Netherlands 3/0.50.90.50.511.0
Portugal7.68.46.03.63.3
United Kingdom1.61.11.21.10.8
United States3.51.85.16.02.4
Other8.67.96.07.47.9
Other countries67.471.465.665.672.0
Malawi0.10.30.41.11.2
South Africa50.040.532.337.641.4
Zimbabwe0.60.81.10.60.5
Other16.729.831.826.328.9
Total100.0100.0100.0100.0100.0
Memorandum item:
Total imports (millions of U.S. dollars)1,163.01,063.41,543.01,740.52,034.7
Source: Mozambican authorities.

From 2002 onward, trade data have been corrected by the authorities to improve coverage and eliminate past data-processing problems.

Organization for Economic Cooperation and Development (OECD).

The exact origin of intracompany imports by Mozal in 2004 is not known in official statistics. These imports are considered as originating from the Netherlands.

Source: Mozambican authorities.

From 2002 onward, trade data have been corrected by the authorities to improve coverage and eliminate past data-processing problems.

Organization for Economic Cooperation and Development (OECD).

The exact origin of intracompany imports by Mozal in 2004 is not known in official statistics. These imports are considered as originating from the Netherlands.

Table 31.Mozambique: Exchange Rates, 1999-2005Q1
Effective Exchange RatesOfficialMarketCash/Parallel Market
(Index, 1990=100)(Meticais per U.S. dollar) 1/(Meticais per U.S. dollar) 1/(Meticais per U.S. dollar) 1/
End ofPeriodEnd ofPeriodMaputo
RealNominalperiodaverageperiodaverageaverage
199971.313.013,21812,67313,30012,68912,844
200068.411.616,98515,14117,14015,68915,996
200162.08.922,88520,45623,32020,70721,139
200258.08.023,18023,18023,85423,66724,281
200356.47.123,34123,34123,85723,78224,226
200470.48.422,12323,35618,89922,58123,166
Quarterly
1999 Q174.513.712,43712,41312,43812,38812,533
Q275.813.912,56512,52512,54612,49912,747
Q373.213.412,79612,71012,93312,76412,823
Q472.113.313,17013,04513,30013,10613,274
2000 Q173.212.914,51313,76515,49714,12114,391
Q272.212.015,27315,03216,07015,92616,256
Q373.112.015,59215,42616,13916,13016,446
Q472.612.016,98516,34117,14016,58116,890
2001 Q163.110.918,57517,78318,66717,89518,356
Q261.210.321,56019,91121,93320,16220,675
Q359.69.321,84021,62722,18221,89422,247
Q463.19.022,88522,50023,32022,87723,278
2002 Q161.08.823,09522,97923,62323,41324,231
Q258.28.323,22423,14123,53023,63124,216
Q358.58.223,34323,25823,87723,80024,407
Q458.08.023,34323,34323,85423,81824,270
2003 Q159.27.923,35223,34523,85323,80924,413
Q257.97.523,34523,34923,71023,80124,188
Q359.47.623,32323,33023,74423,71624,371
Q456.47.123,35323,34023,85723,80423,933
2004 Q159.57.223,38023,36623,74623,79124,433
Q262.07.422,85223,16323,00223,67124,029
Q365.37.820,97522,09021,38922,65523,255
Q466.47.918,60419,87418,89920,20920,836
2005 Q119,02118,91918,95818,90420,100
Sources: Bank of Mozambique; and IMF, International Financial Statistics.

Midpoint official exchange rates; buying and selling rates plus/minus 1 percent.

Sources: Bank of Mozambique; and IMF, International Financial Statistics.

Midpoint official exchange rates; buying and selling rates plus/minus 1 percent.

13Prepared by Teresa Dab?
14This paper will focus on Mozambique’s main taxes, including those on income and profits, on goods and services, and on international trade at the central government level, as well investment tax incentives. The central government also levies stamp duties, a poll tax, and taxes on gifts, inheritances, and real estate transfers. The main local taxes are the local poll tax, tax on the rental value of real estate, the economic activity tax, and the commerce and industry tax.
15Law 3 of January 1987.
16The business profit tax (Contribuição Industrial) was levied on profits of companies (public and private) and individuals resulting from commercial and industrial activities with rates ranging from 15 to 50 percent. The labor income tax was levied on wages and fees earned by individuals and on cooperatives and the income of individuals earned from agriculture, forestry, and livestock activities, with marginal rates ranging from 0 percent to 30 percent.
17The complementary tax, whose rates ranged from 8 to 40 percent, was applied to the capital income and profits of persons owning small businesses, who also were employed in a company and were subject to the labor income tax.
18For instance, because of the need to hire and retain competent employees, public sector employees were exempt from income tax because public sector wages were, in general, lower than salaries in the private sector.
19Before 1996, only about 3 percent of public servants had attained a university degree, and nepotism was common. Deposits and transfers were checked through visual examinations of statements provided by banks, and the entire verification procedure was manual. Unprocessed payments were unlikely to be detected, and the risk of fraud obviously high (see Theodossiadis, 2004).
20The main elements of Law 6 of December, 17 1993, were (i) a reduction in the rates of customs duties on imported raw material, general customs fees, business tax, and the complementary tax; (ii) a revaluation of fixed assets; (iii) the elimination of the complementary tax for employees; and (iv) the suspension of export duties for five years.
21The current tariff structure is as follows: 0 on essential goods, generally applicable to medicine and raw materials from SADC area; 2.5 percent primarily applicable to inputs from the rest of the world and cereal; 5 percent on capital goods; 7.5 percent for rice, sugar, and intermediate goods, such as parts for machinery; and 25 percent on consumer goods. The government plans to reduce the top tariff rate to 20 percent by 2006.
22Decree 51 of September 29, 1998, establishing the VAT code, and VAT supplementary legislation in the form of decrees, ministerial orders, and decisions.
23In line with numeral 29, 32 and 37 of Article 9 of the code, the following goods are zero-rated: cornmeal, rice, bread, powdered milk for nursing mothers, wheat and wheat flour, tomatoes, horse mackerel, petroleum for lamps and jet fuel, mosquito nets, bicycles, animal feed rations, and sugarcane production inputs.
24In addition, there is a surcharge on sugar imports.
25The VAT revenue productivity is defined as total VAT revenue as a percentage of the consumption or GDP, divided by the VAT standard rate.
26Excises taxes were established by Law 3 of January 8, 1998, further regulated by Decree 52 of September 29, 1998, establishing the Excise Taxes Code, and further amended in 1999 by Decrees 31 of May 24, and 79 of November 1, 1999.
27The decision to raise the tax was preceded by a comprehensive analysis of the impact of a higher fuel tax, which concluded that the aggregate short-term impact of a rise in fuel tax on poverty would be modest (see Nicholson and others, 2003).
28The new PIT eliminates the anomaly whereby state employees pay no income tax. This was once justified partly on the grounds that the state generally paid lower wages than the private sector and partly as a measure to retain skilled people in state employment.
29These bonds refer to those issued by the Bank of Mozambique (BM) at a deep discount but pay no interest and are repayable by the BM within a maximum of 354 days (Decree 24/2003).
30See Appendix I of Goorman, Sab, and Ramos (2000). As a general rule, tax incentives to promote investment were granted according to Law 3 on Investment of June 24, 1993, and Decree 12 of July 21, 1993 (as amended by Decree 37 of August 8, 1995). In addition, Decree 62 of September 21, 1999, regulated the establishment and operation of industrial free zones, the local term for export processing zones (EPZs).
31Decree 16/2002.
32It refers to the Mining Law of 2002, and the Petroleum Law 3 of 2001.
33By Decree 62 of September 21, 1999. This decree also submits the authorization to create a duty-free zone to stricter rules as follows: (i) submission of a detailed application by the prospective investor to the Free Zone Government Board (monitoring body); (ii) minimum limits on the number of Mozambican employees and the percentage of local content of the final product; and, (ii) allowable activities within free zones limited to industrial activities (other than those related to natural resources, raw cashew nuts, and fish), which are expected to have a relevant impact on the domestic economy and which result in exports of at least 85 percent of annual production.
34In 1994, the revenue shortfall at customs accounted for 2 percent of GDP.
35The number of customs staff increased form 365 before the reform to 1270 at present. In spite of existing civil service constraints on employment and firing, an important number of customs officers were removed. Most of the new customs staff are university graduated and were recruited according to specific standards. The salary scale for customs officers is higher than that prevailing for other civil servants. The remuneration comprises a basic salary and a custom allowance based on merit. In addition, customs staff enjoys health insurance and a pension plan (see Enterplan, 2004).
36A company yielding more than Mt 30 million in VAT (a year) is automatically classified as a VAT large taxpayer. It is estimated that there are at present approximately 36,000 VAT payers in Mozambique. More than 10,000 VAT paying enterprises are located in the Maputo province. Only 400-500 firms pay the bulk of VAT revenues (Enterplan, 2004).
37For instance, the link between the customs database on VAT paid at the border (on imports) and data on exports, which are zero-rated, and the database of the VAT unit at the DGI is not fully operational because to the lack of computerization (Enterplan, 2004).

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