Mozambique: Economic Rehabilitation and the Poor

IMF Working Papers, September 1, 1991

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Poverty remained widespread in Mozambique, mostly on account of the prevalent war situation.
The paper profiles the lowest income groups in Mozambique and examines how they were affected by the economic recovery program of 1986–90.
Key aggregate outcome: despite large price adjustments, in real terms minimum and low wages improved over the 1986–90 period.
Agricultural production increased in response to better incentives.
Small farmers in safe areas improved their relative income position.
Continuing constraints: a large refugee population and war-related destruction create a pressing need for extended emergency aid.

Real wages:
- Minimum and low wages improved in real terms over the 1986–90 period despite large price adjustments.
Agriculture and rural income:
- Agricultural production increased in response to better incentives.
- Small farmers in safe areas experienced improved relative income positions.
Poverty drivers and humanitarian needs:
- Widespread poverty is attributed mostly to the prevalent war situation.
- The presence of a large refugee population and war-related destruction sustains urgent demand for extended emergency aid.

Maintain and strengthen measures that support agricultural incentives, given the observed link between improved incentives and higher agricultural production.
Target assistance to small farmers in safe areas to consolidate gains in relative income position.
Prioritize extended emergency aid and humanitarian support to address needs arising from the large refugee population and war-related destruction.

Subject: Agricultural commodities, Commodities, Income, Labor, National accounts, Personal income, Population and demographics, Wages
Keywords: absolute poverty, Africa, Agricultural commodities, consumer goods, Income, minimum wage, Personal income, producer price index, purchasing power, supplementation scheme, U.S. dollar, Wages, weighted index, WP