Mozambique's debt remains at high levels and this increases its vulnerability, but the country can still implement measures to ensure its stability, according to the head of the International Monetary Fund (IMF) mission.

Pablo Lopez Murphy noted that when comparing Mozambique to other countries in the region, what stands out is the extremely high level of debt, making it vulnerable to impacts on the economy. But also, because part of the government's revenues must be allocated to servicing the debt.

"Our advice for Mozambique is to reduce the vulnerability associated with the high level of debt, and there are two important ways. The first is to have greater economic growth, because this is the denominator of the Gross Domestic Product ratio, and this is what history has shown in various countries. And the second is to have prudent fiscal policies, i.e. low budget deficits. That is the essence of what is needed to allow the private sector to develop and expand," said Pablo Lopez Murphy.

He was speaking on Monday (31) in Maputo during a meeting with the president of the Confederation of Economic Associations (CTA).

On the other hand, Lopes Murphy said that the IMF had noticed an evolution in the Mozambican economy with the introduction of the Economic Acceleration Package (PAE), despite doubts at the beginning.

"The SAP was a concern for us. We had doubts as to whether the level of measures adopted in 2022 would be sustainable. But now, during 2023, we think they are heading in the right direction because we have seen the reduction of many expenses, including fiscal ones. We believe that the measures will be sustainable if they remain at the same levels as government earnings and other sources of income," he said.

But also, the IMF mission chief believes that the Mozambican tax authorities should obtain capital gains through taxes that are less expensive for private sector operators.

"In general, our advice to many countries, including Mozambique, is to reduce tax rates so that there is more financial activity on them. This method is more beneficial for the economy than a narrow tax base with very high rates. So we try to reduce distortions as much as possible," he said.

The IMF believes that the high rates have to do with the provision of services offered by the state, such as health and education.