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Maputo subsidises poor as prices rise

Maputo - Mozambique will raise food and fuel prices from April, but subsidise food for two million poor people to avoid the sort of protests that have rocked North Africa and the Middle East, a government official said on Wednesday.

Planning and Development Minister Aiuba Cuereneia said the decision was taken after this week's cabinet meeting.

"We will review the fuel prices between April and June but the rise will not go over 10%," he told Reuters.

The government was forced to reverse a 30% bread price increase last year after a week of riots in which 13 people were killed.

From August, Mozambique will subsidise nearly two million people to mitigate the impact of these increases and will use taxes on major mining companies - which form a growing part of the economy - to cover this support.

Mozambique has some of the largest yet untapped coal reserves, and companies such as Australia's Riversdale and Brazil's Vale have invested in the sector.

"We will provide (parcels) that consist of cereals, rice, fish and cooking oil to the people who are receiving the minimum statutory wage and they will also benefit from subsidised public transport," Cuereneia said.

"The prices of food and fuel are rising due to the situation in Japan, North Africa and the Middle East, therefore we want to take measures to prevent similar (protests) here," he said.

International food and oil prices have climbed, stoking inflation across the globe and fears of the repeat of the 2008 food price crisis that saw worldwide protests.

About 70% of the 23 million people in the southern Africa nation live on less than $2 a day.

Cuereneia said senior state officials would also not receive salary increases for the second straight year, and that austerity measures introduced last year would remain in force.

The government last year froze salary and allowance increases for senior officials and curbed foreign travel.

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