In the context of the request for a new three-year arrangement under the Poverty Reduction and
Growth Facility with the Republic of Mozambique, the following documents have been released and
are included in this package:
- the staff report for a request for a new three-year arrangement under the Poverty Reduction
and Growth Facility, prepared by a staff team of the IMF, following discussions that ended in April 2004, with the officials of the Republic of Mozambique on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on June 7, 2004. The views expressed in the staff report are those of the staff team and do not necessarily reflect the views of the Executive Board of the IMF.
- a staff statement of June 21, 2004 updating information on recent developments.
- Press Releases summarizing the views of the Executive Board as expressed during its June 21, 2004 discussion of the staff report that completed the request.
- a statement by the Executive Director for the Republic of Mozambique.
The documents listed below have been or will be separately released.
Letter of Intent sent to the IMF by the authorities of the Republic of Mozambique *
Memorandum of Economic and Financial Policies by the authorities of the Republic of Mozambique *
Technical Memorandum of Understanding by the authorities of the Republic of Mozambique *
The policy of publication of staff reports and other documents allows for the deletion of market-sensitive information.
To assist the IMF in evaluating the publication policy, reader comments are invited and may be sent by e-mail to: publicationpolicy@imf.org
Introduction
- Mozambique’s last arrangement under the Poverty Reduction and Growth Facility (PRGF) expired on June 28, 2003. In the context of the fifth and last review under the arrangement, the staff reached understandings with the authorities on a set of quarterly indicative targets and benchmarks to monitor performance during the remainder of 2003.
- On December 10, 2003, the Executive Board completed the Article IV consultation and considered the Ex Post Assessment (EPA) of Mozambique’s Performance under Fundsupported programs. Directors commended the authorities for the pursuit of sound macroeconomic policies and structural reforms over the past fifteen years and urged them to persevere in their efforts to consolidate macroeconomic stability and deepen structural reforms. In particular, Directors stressed the need to further strengthen revenue, improve public expenditure management, address remaining vulnerabilities in the financial system, and broaden growth by enhancing human capital and removing obstacles to private sector development. Looking forward, most Directors expressed readiness to consider a new lowaccess
PRGF arrangement based on a strong program to help the authorities address remaining challenges.
- In the attached letter to the Acting Managing Director dated June 4, 2004 (Appendix I, Attachment I), the Minister of Planning and Finance and the Governor of the Bank of Mozambique request a new three-year PRGF arrangement for SDR 11.36 million (10 percent of quota) with even phasing in support of the government’s economic program for 2004-06 (Table 1). Projected disbursements under the PRGF would bring Mozambique’s use of Fund resources to 71.6 percent of quota at the end of the arrangement in May 2007. The new PRGF arrangement is expected to play a catalytic role in securing financing from donors and other multilateral and regional institutions. In addition, both the authorities and the donors have been of the view that the arrangement would help the government garner support for politically difficult reforms and would facilitate the transition to the new administration in early 2005.
- In April 2004, the government published its second progress report on the implementation of the PARPA (Portuguese acronym for PRSP), which is analyzed in the Joint Staff Assessment (JSA) prepared by Fund and World Bank staff. Relations with the Fund and the World Bank are summarized in Appendices II and III, respectively. Appendix IV discusses statistical issues.
- In August 2001, the World Bank approved an Economic Management and Private Sector (EMPSO) credit to support improvements in budget management, a public expenditure review, steps to strengthen the financial sector, and the opening of the telecommunications and air transport sector to private investment. A first disbursement of US$64 million was made in October 2002, and the remaining disbursement of US$70 million took place in December 2003. A Country Assistance Strategy (CAS) paper for 2004–07 approved by the World Bank Board in November 2003 envisages financing for institutional and policy reforms through a series of Poverty Reduction Support Credits (PRSCs), with disbursements amounting to about US$60 million a year starting in mid-2004. The World Bank is also conducting a Poverty and Social Impact Analysis (PSIA) of the effects of user fees in primary education.
Footnote:
* May also be included in Staff Report
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