The Mozambican state must eliminate around 5,000 employees from its payroll by the end of this month, according to a warning from the International Monetary Fund (IMF).

By 2028, Mozambique's plan is to reduce the amount it spends on civil servants to 10% of Gross Domestic Product, compared to the 14.8% planned for this year. This also includes speeding up the processing of pensions for civil servants who reach the age of 60.

The commitment to curb wage bills, which absorb 72% of tax revenues, made it possible to release 60 million dollars from the IMF last week, which were in danger of being postponed until next year.

The IMF also expressed concern that perceptions of corruption have not improved since 2017.

"Large-scale impunity is seen as endemic," according to the fund's report. "Corruption and patronage networks are generally seen as systemic and often linked to political affiliation," writes Bloomberg.

The IMF said that Mozambique needs to revamp its asset declarations and conflict of interest laws to bring them into line with international standards and best practices. It also needs greater transparency in public procurement.

This is particularly important given the size and relevance of Mozambican public companies in relation to the economy, as this generates significant corruption risks, said the Washington-based lender.

The total size of the assets of 21 public companies in 2022 was equivalent to around 70% of GDP, the IMF said in a separate report. Of these, nine recorded losses that year. (Source: Bloomberg. Image: DR)