Mozambique has increased the minimum pay levels for workers including government employees amid warnings from the International Monetary Fund to have the country keep its wage bill under control.
The Southern African nation is said to be deeply immersed in a debt crisis.
Labour minister Vitoria Diogo said that the public workers minimum wages would rise by 21 percent.
The increase is higher than that for employees in the private sector including banking, construction and manufacturing, and slightly less than inflation, which accelerated to 21.57 percent in March.
Containing the expansion of the public wage bill is one of the key points Mozambique needs to address as it seeks to negotiate a new aid program with the IMF, Ari Aisen, the fund’s resident representative in Maputo, said in an April 12 presentation.
Economic growth in the southern African nation fell to 3.4 percent in 2016, the slowest pace since 2000, as prices for the coal and aluminum it produces plunged. Donors and the IMF halted government funding after $1.4 billion in previously undisclosed debt was uncovered, which led to the government defaulting and seeking to restructure its external loans.
Some holders of the country’s Eurobonds have said they won’t start restructuring negotiations until they have an idea of what a new IMF program will look like, and an audit into the hidden debt due for completion April 28 is published.