Mozambique: Wage Costs in Public Administration Fall 3.9 Percent

Maputo — Mozambican State expenditure on wages and other types of remuneration fell 3.9 percent in the first half of the year to 107.2 billion meticais (1.6 billion US dollars at the current exchange rate), amid efforts to contain the public-sector wage bill, which covers more than 350,000 workers.

According to first-half budget execution data from the Ministry of Finance, personnel expenditure amounted to 109.8 billion meticais, equivalent to 51.2 percent of the annual allocation for this year.

Of this amount, salaries and remuneration accounted for 107.2 billion meticais, equivalent to 51.2 percent of the annual budget allocated to this expenditure item and representing a 3.9 percent decrease from the first half of 2025.

The reduction follows the state's record expenditure of 209.068 billion meticais on salaries and remuneration in 2025, three percent more than in 2024 and above the 205.555 billion meticais budgeted in the State Budget.

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According to 2025 budget execution data, the state had paid 202.858 billion meticais in wages and remuneration in 2024, meaning that expenditure increased by around 6.2 billion meticais (€83 million) the following year.

The International Monetary Fund (IMF) has been calling for restraint in public-sector spending and progress on structural reforms aimed at strengthening the sustainability of Mozambique's public finances. In the conclusions of its regular assessment published in February, the IMF warned that "excessive spending on the public-sector payroll and rising debt service are consuming resources intended for development and social protection".

It also advocated a multi-year fiscal consolidation strategy focused on containing the wage bill and broadening the tax base.

Spending on salaries continues to account for the largest component of Mozambique's recurrent state expenditure, within a public-sector workforce estimated at between around 357,000 and 370,000 public servants and state employees, according to World Bank estimates and data previously released by the Government.

In a report published in March, the World Bank said Mozambique's public sector "is not oversized" compared with other countries in the region, stressing that the increase in expenditure was mainly the result of higher remuneration rather than an increase in the number of workers.

"The sharp increase in the payroll was driven by increases in salaries, rather than increases in the workforce," the international financial institution said.

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According to the World Bank, the public-sector wage bill increased from less than 5% of gross domestic product (GDP) in 2000 to around 15% in 2023, becoming one of the main sources of pressure on public finances.

The Government itself recognises this pressure and, in the Medium-Term Fiscal Scenario for 2027-2029, recently approved by the Council of Ministers, it plans to gradually reduce the wage bill's share of GDP from 12 percent in 2027 to 11.5 percent in 2028 and 10.7 percent in 2029.

The strategy involves limiting recruitment, strengthening audits and proof-of-life checks, accelerating retirement processes and reviewing allowances and length-of-service increments, including a 50% reduction in the percentage applicable to civil and special length-of-service increments.

The issue remains particularly sensitive because of the implementation of the Single Salary Table (TSU) in the public administration, approved in 2022 to eliminate pay disparities and rationalize the public administration wage bill, but which prompted opposition in several sectors, including health, education and the security forces.

Overall, public expenditure executed in the first half of the year reached 157.5 billion meticais, equivalent to 43.4 percent of the annual budget and representing a real decrease of 10.3 percent compared with the same period of 2025.