By Paul Fauvet
Maputo - This week Mozambican President Joaquim Chissano swore into office the country's new prime minister, 46-year-old Luisa Diogo, and urged all members of the government - including those who might disagree with his choice - to give her their full support.
Chissano recalled that when he had first invited Diogo into the government in 1994, as deputy finance minister, she had been surprised, and unsure about accepting. He said he had chosen her because of the competence she had shown in a series of earlier finance jobs, because of her youth, and because she was a woman.
In the ensuing 10 years Diogo has not disappointed him. First as deputy minister, and then as minister from 2000, Diogo has been at the head of major, and sometimes controversial, reforms to the country's tax system.
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These included the introduction of Value Added Tax in 1999, and a modernisation of taxes on income and profits that took effect last year.
Diogo and Tomas Salomao (the finance minister from 1994 to 1999) dealt with chronic inefficiency and corruption in the customs services by farming out the management of customs to a British concern, the Crown Agents. Hundreds of new staff were recruited and trained, and customs revenue soared. Now the British experts are being phased out as the customs are gradually returned to Mozambican management.
Diogo has always rejected government interference in exchange rates. The value of the Mozambican currency, the metical, is supposedly determined by supply and demand. Over the past few years, the metical has been impressively stable against the US dollar, not fluctuating very much from a rate of 24 000 meticais to the dollar.
But since the dollar has been declining against both the South African rand and the euro, the price of Mozambican imports from South Africa and from Europe has been steadily rising.
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