In a news brief issued on March 27, the IMF Executive Board announced that it had completed the first review under the Poverty Reduction and Growth Facility (PRGF) for Mozambique. As a result, Mozambique will be able to draw up to the equivalent of SDR 36.8 million (about $50 million) from the IMF.
In view of the emergency situation and its likely impact on the balance of payments, access under the PRGF arrangement has been augmented.
Commenting on the IMF Executive Board’s discussion, Shigemitsu Sugisaki, Deputy Managing Director of the IMF, made the following statement:
“The Executive Directors expressed their deep sympathy for the people of Mozambique who had sustained deep human losses as a result of recent flooding. Regarding the material aspects of the tragedy, the authorities were commended for their quick response in providing assistance to flood victims, mobilizing the support of the international donor community, and planning for the reconstruction of the extensive damage to infrastructure.
“In 1999, Mozambique’s overall economic performance was strong, as evidenced by high growth, low inflation, and a comfortable level of international reserves. However, financial policies in the second half of the year had raised some concerns. Regaining control of monetary aggregates and managing the budget prudently are crucial for the preservation of macroeconomic stability, and the authorities’ commitment to economic stability is, in this respect, reassuring.
“The government’s structural reform agenda suffered some delays toward the end of 1999. However, the authorities have now implemented some of the delayed measures and intend to proceed with important reforms in the areas of fiscal management and transparency and public administration—all actions necessary for improving the formulation and monitoring of economic policies. In this context, the authorities’ commitment to start the publication of quarterly budget execution reports is particularly welcome. Reforms to promote private sector development will also be important. Following the introduction of trade restrictions affecting the cashew and sugar sectors in 1999, the authorities intend to carry out comprehensive studies to guide the liberalization of these sectors and to strengthen their performance.
“Significant progress in strengthening the poverty focus of the government’s economic and social policies has been achieved in recent years, as evidenced by a thorough poverty assessment, the formulation of a poverty action plan, and an interim poverty reduction strategy paper. It is now important to widen the dialogue on poverty issues and include a broad spectrum of civil society in the process of preparing a full poverty reduction strategy paper, which will serve as the basis for future support under the Fund’s Poverty Reduction and Growth Facility, and for further debt relief under the Enhanced HIPC [Heavily Indebted Poor Countries] Initiative,” Sugisaki said.
Photo credits: Denio Zara, Padraic Hughes, and Michael Spilotro for the IMF, pages 97–100, 103–106, 108 and 112; Odd Andersen for AFP, page 110; Sebastian D’Souza for AFP, page 111.