Measures to stimulate economy

Mozambican president on Tuesday announced 20 measures to stimulate the economy, including a 22% reduction in the rate of corporate income tax (IRPC) and a 1% reduction in value added tax (VAT). The 20 measures are part of the Stimulus Package for the Acceleration of the Economy [PAE], which Filipe Nyusi disclosed in an address to the nation, aimed at responding to the needs of growth of the country, the negative impact of the Russia-Ukraine war, of the armed violence in Cabo Delgado province, northern Mozambique, and of the natural disasters.The measures announced lower the IRPC from 32 percent to 10 percent in agriculture, aquaculture and public transport, and VAT from 17 percent to 16 percent in agriculture and renewable energy.

The Mozambican head of state also pointed to the introduction of tax incentives for new investments over the next three years, but did not give the rates of these incentives.In the package announced, the share of revenues from natural resources transferred to the provinces where they are extracted will rise from 2.5 percent to 10 percent and a US$250 million (244.4 million euros) loan guarantee fund will be created so that the banks can provide credit to the economy at more accessible interest rates. The SAP introduces mandatory blending of imported fuels with biofuels, “aiming to generate more jobs and induce more private investment in the value chain of agricultural production.”

Filipe Nyusi, who is also head of government, also announced a general review of entry visas to the country, with exemption for citizens of countries with low immigration risk and granting of investment visas with longer periods to foreign citizens holding investments in Mozambique.In the same framework, the conversion of simple short-term tourism visas into mixed tourism and business visas is foreseen.

“To facilitate the acquisition of visas, we will introduce electronic visas for citizens of countries not covered  the visa waiver,” Nyusi stressed.

The range of measures also provides for adjusting labour and investment laws with a view to making them more attractive to foreign investment, creating stable and quality jobs, transferring skills and building the capacity of Mozambican workers.The package also calls for simplification of administrative processes, reforms in the justice administration system, as well as the creation and implementation of the sovereign wealth fund. Filipe Nyusi also highlighted the need for reform of the state’s internal audit subsystem, efficiency of public administration and strengthening the system of supervision of social security funds. The Mozambican head of state said that the measures he announced today had been drawn up in conjunction with the International Monetary Fund (IMF) and would have an impact in the short, medium and long term.