03 THE CONTESTED INFLUENCE OF IFI’S OVER LABOUR AND SOCIAL PROTECTION POLICY cannot go backwards”. There are many ways to finance social assistance including the reallocation of public expenditure to sectors with greater socio-economic impacts; increases in tax revenue and earmarking of taxes on natural resources and reducing illicit financial flows. In the short-term, development aid is perhaps the most realistic source of financing. However, as this case has shown, external financing is prone to the whims of international development and financial institutions. In the long run, conditionalities can undermine the redistributive capacity of the state – both in terms of fiscal space, with increased public However, Mozambique’s extractive debt, and administrative capacity, with the development model poses a paradox. outsourcing of state functions. Ultimately, On the one hand it increases the need it is critical to democratize debates about for social assistance, because it leads social protection and build alliances to dispossession, exploitation and between member-based organizations exclusion. On the other, it undermines the including the Mozambican Civil Society redistributive role of state in addressing Platform for Social Protection (PMSC-PS), the roots of poverty and inequality, due the Organization of Mozambican Workers to associated fiscal exemptions, (il)licit (OTM) and the National Union of Peasants financial flows and the acquisition of public (UNAC). debt. 22 Fast-tracking Financialization - International Financial Institutions’ Responses to the Covid-19 Pandemic in Mozambique