The government will phase out subsidies on fuel starting in April, but students and workers will receive transport passes when fuel prices revert to market levels for the first time in more than three years, said Antonio Cruz, director of policy analysis in Mozambique's planning ministry.
Subsidies on bread and rice will end in June, but families earning less than about US$2 a day, meaning about 90% of Mozambicans, will instead be able to buy a basket of basic foods at reduced prices in certain shops, he added.
Cruz said high prices were a driving force in both the protests that have swept across north Africa this year and deadly riots that shook the Mozambican capital last year.
"These protests are a sign that the cost of living is very high," he said.
"It is an international crisis. It is also influencing what is happening in north Africa.
For a second year in a row senior government officials will not get a pay rise, he added.
Cruz said the fuel subsidy had been especially draining on state coffers, costing around US$10 million (€7 million) a month in a country that relies on foreign aid for nearly half its budget.
Development Minister Aiuba Cuereneia said the savings from the subsidies would be used to pay for the new food basket and transport benefits.
"We will also redirect the money from the price control measures that are ending. For example, we are going to use the money from the subsidies for fuel, bread and rice," he told state newspaper Noticias.
The government last year lifted subsidies on bread, causing an overnight increase in prices on September 1 that sparked rioting which left 14 dead and hundreds injured.
Aiming to quell the unrest, Maputo restored the subsidies, even though rising global fuel and food prices and the weaker local currency meant the government could no longer afford to pay for them.
"After evaluating the situation, it is clear that the international picture is far from improving, which will have negative consequences for our country," the minister said.
The finance ministry already announced earlier this month that it would need to increase the national budget to pay for the subsidies. The minister gave no details on the budgetary implications of the new measures.
Source: Sapa-AFP
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