IMF Director Abdoulaye Bio-Tchané Visits Mozambique

Press Release No. 06/179
August 7, 2006

The Director of the IMF's African Department, Abdoulaye Bio-Tchané, visited Maputo from August 1 to 3, 2006 i) to attend the African Governors (Caucus) conference ahead of the annual meetings of the World Bank and International Monetary Fund in Singapore and ii) to participate in bilateral talks with the Mozambican authorities, including Prime Minister Luisa Diogo, Minister of Finance Manuel Chang and Governor of the Bank of Mozambique, Ernesto Gove.

At the meeting of the African Governors (Caucus), Mr. Bio-Tchané strongly reiterated that the IMF remains committed to help low-income countries make progress toward achieving the Millennium Development Goals.

In his discussions with Mozambican authorities, Mr. Bio-Tchané praised them for the successful completion of the fourth review under the Poverty Reduction and Growth Facility (PRGF) arrangement with the International Monetary Fund. He noted that Mozambique continued to have strong macroeconomic performance in 2005 and early 2006 despite exogenous shocks. Fiscal and monetary policies remain prudent, and the macroeconomic outlook remains favorable; however, vigilance will be required, in light of volatile oil prices and unpredictable weather.

Over the medium term, the main challenges will be in sustaining broad-based economic growth and making further inroads in alleviating poverty through the implementation of the poverty reduction strategy for 2006-09 (PARPA II). This will entail persevering with stabilization efforts, reducing the cost of doing business, and continuing to address governance issues, including further enhancements to public expenditure management systems and strengthening the transparency of natural resource management.

The creation of sufficient fiscal space for priority investments will require i) enhanced revenue mobilization, ii) reinvigorating the public sector reform program aimed at improving public service delivery, and iii) using scaled-up donor assistance effectively. The fiscal decentralization strategy also needs to be clarified, well sequenced, and include the appropriate checks and balances that will ensure resources are well spent.



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