IMF strangles war-ravaged Mozambique

By Norm Dixon The International Monetary Fund is standing over the impoverished, war-shattered southern African country of Mozambique because the government has had the temerity to announce measures to try to improve the lives of its people. Mozambique's 15 million people have an annual average income of just US$100, making it one of the poorest countries in the world. The country was subjected to US- and apartheid-supported terrorist attacks from 1975 until just a few years ago. An uneasy peace prevails between the government and right-wing rebels. The economy and social services have all but been destroyed. Late last year the Mozambican government announced plans to increase the minimum wage of $14 a month by 37%. Average wages for children on the informal labour market range from $3 to $7 a month, plus one meal. The IMF opposed the increases, saying that the government had not cut its budget enough. The IMF issued a blunt statement calling for it to be allowed greater control over the economy. It demanded cutbacks in state expenditure, curbs on inflation and monetary policy, and further privatisation. The IMF backed down somewhat after Mozambique's western donor countries — which usually support the IMF's hard line — defended the Frelimo-led government, which won the election last year. The donors said they were happy with Mozambique's progress towards economic "reform". However, IMF officials have indicated they will not make investment capital available until the government reduces inflation from its current 40% to 15%.

From GLW issue 221