## ANNEX 1 – SIMPLIFIED MATRIX OF PRINCIPAL INDICATORS ## Source details **Canonical URL:** [ANNEX 1 – SIMPLIFIED MATRIX OF PRINCIPAL INDICATORS](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2005/_cr05310.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2005/_cr05310.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2005/_cr05310.pdf.json) --- ### I. Introductory note — evaluation scope and 2004 highlights - Evaluation conducted during the final year of the Government's Five-Year Programme, 2000-2004. - Objectives: - (i) improve the consistency and coherence of the various planning instruments; and - (ii) monitor and evaluate the implementation of PARPA. - Document structure: International Overview; National Social and Demographic Overview; National Macroeconomic Overview; Principal Developments by Sector; Budget Execution. - 2004 highlights: - continued and consolidated public sector reforms; - notable growth in social and economic infrastructure; - signs that the Mozambican economy is continuing to grow at the planned rate, inflation under control, and the Metical appreciated strongly; - Government honoured budget execution commitments, channelling more resources into PARPA-prioritised sectors and keeping budget execution rates within legal limits. ### II. International overview — key findings and risks - World economy: - estimated 5% growth rate in 2004 (compared with 3.9% in 2003). - Growth largely driven by North American and Asian economies (Japan and China). - Oil and interest rate context: - mid-August oil price: 44.7 USD per barrel. - end-of-year oil price: fluctuated between 45 and 50 USD per barrel. - Fiscal deficits of advanced economies: 3.4% of Gross Domestic Product in 2004. - Selected country/region indicators: - United States GDP growth: 4.4% in 2004; Federal funds at 2.25% after five increases in the second half of the year; industrial production 4.4%; unemployment December 5.4%. - Japan growth: 4% in 2004; exports 14%; private consumption 3.4%; industrial production (December) 1.8%; unemployment December 4.4%. - Euro area GDP growth 2004: 1.8%; industrial production 1%; unemployment December 2004: 8.9%. - China growth: 9.5% in 2004; retail sales grew by 14.%; inflation around 4% in 2004. - Emerging economies GDP growth ~6.6% in 2004; international trade +9%; exports ~11%. - Africa aggregate GDP growth 2004: 4.5%; average inflation rate: 8.4%. - South Africa GDP growth 2004: 2.6%; unemployment March 2004: 27.8%; inflation 2004: 1.4%; Rand end-2004: 5.6 Rands/USD (16% appreciation vs end-2003). - Global outlook and risks: - Relatively sustainable recovery expected over 2004–2005, risks linked to oil prices and developed economies' fiscal deficits; need for more equitable regional growth. ### III. National social and demographic overview — MDG review and sectoral targets - PARPA I as principal MDG delivery tool; revision planned in 2005; first comprehensive five-year MDG review scheduled for September 2005. - Poverty and food insecurity: - IAF 2002–2003: 54% of population living in poverty (less than US$1 per day), down from 69% in 1996/7. - PARPA I target of reducing poverty incidence below 60% by 2005 has been met. - PARPA I extrapolation target: reduce proportion in poverty to 44% by 2015. - Education: - EP1 net enrolment rate 2004: 75.6% (up from 43.6% five years earlier). - EP1 repeating students in 2004: around 21% of all students (21.9% in 2003). - Gender: - EP1 net enrolment girls 2004: 73.2%; female participation EP1: 45.9%; EP2: 40.7%. - Health and mortality: - U5MR: 1997 DHS 201 per 1,000; 2003 DHS 180 per 1,000; 2015 target: 82 per 1,000. - DTP and Hepatitis B vaccination coverage in 2004: 96%. - Maternal mortality: 1995 baseline 1,062 per 100,000; 2003 IDS estimate 408 per 100,000; 2015 implied target 266 per 100,000. - HIV/AIDS: - Adult HIV prevalence 2002: 13.6% (sentinel surveillance of pregnant women). - 2004 antiretroviral treatment: about 8000 people receiving treatment, including more than 4000 pregnant women for PMTCT. - Water and environment: - 2004 water coverage: rural 43.2% (increase of 3.8% on 2003); urban and peri-urban 36.8% (increase of 0.8% on 2003). - Population growth rate estimated at 2.4%; significant investments required to meet 2015 targets. ### IV. National macroeconomic overview — strategy, objectives and preliminary 2004 results - 2004 policy focus: attain Government Programme objectives and support sustained economic growth while reducing absolute poverty via PARPA. - Principal macro objectives for 2004 included: - GDP growth in the region of 8%; - average annual inflation restricted to 8 - 9%; - approximately 2% growth in exports of goods (excluding large-scale projects). - Preliminary 2004 results: - GDP growth: 7.2% (headline reported elsewhere as 4.6% growth in economic activity—see sectoral disaggregation); - production growth 2004 relative to 2003: 4.6%; - accrued inflation: 9.3% (MABENA) and 9.1% (Maputo); - Metical appreciation: 21% (reported as 21% and 21%/20.8% in narrative); - goods exported: 1451.9 million USD (planned: 1274.5 million). ### IV.1 Global and sectoral production — activity and sectoral growth rates (selected) - Aggregate production: - Total Production growth rates (2002, 2003, 2004): 16.7; 4.8; 4.6. - Total Production without aluminium (2002, 2003, 2004): 17.1; 2.3; 2.2. - Total Production without aluminium and gas (2002, 2003, 2004): 16.8; 2.4; 1.3. - Total Production without large-scale projects (2002, 2003, 2004): 4.6; 7.4; 5.1. - Selected sector volume growth rates (2002, 2003, 2004): - Agriculture, fisheries & forestry: 10.0; 8.6; 9.1. - Mineral Extraction Industry: 52.1; 31.6; 215.7. - Manufacturing Industry: 3.9; 14.9; 12.7. - Construction: 104.6; -7.6; -14.6. - Transport & Communications: -8.0; 8.6; 16.4. - Electricity and Water: 10.2; -12.6; 5.7. - Sectoral note: large-scale projects (Mozal aluminium, Pande-Temane gas) materially inflate headline growth; excluding these yields markedly lower growth. ### Sectoral developments — highlights and key figures - Agriculture, livestock and forestry: - Total sown area: 4,027,000 hectares; cereals 55%, cassava 27%, vegetables 18%. - Sown land losses: approximately 111,095 hectares = 2.7% of total sown area; ~75,000 families affected. - Registered regional agricultural production growth in 2004: 9%. - Business production and family cash crop production (excluding own consumption): 11.7% growth. - Exports increased by 10.5% in 2004. - Country cereal shortage: 430,000 tonnes (mainly rice and wheat), covered by imports. - Crop-specific: Cotton production increase: 69.9% (also reported as 79.1% elsewhere); Cashew nuts: -32.6%; Copra: -3.1%; Sugar cane: -3.3%. - Agricultural aggregates (selected): Total (2002,2003,2004): 7.3; 9.8; 9.0. Family Produce Sold (2002,2003,2004): 9.5; 4.3; 12.1. - Fisheries: - Overall fisheries production change in 2004: -3.8%. - Business sector fisheries: -3.2%; family sector: -4.4%; family produce sold: -5.5%. - Kapenta production in business sector increased by 67.6% in 2004. - Exports: approximately 20,500 tonnes of seafood exported in 2004. - Mining: - Total mineral production increase 2004 vs 2003: 215.7%. - Natural gas production began February 2004 at Pande-Temane; national natural gas network extension planned to Ancuabe end-2005. - Selected mineral growth (2002,2003,2004): Coal 57.7; -15.6; -55.0. Natural gas 94.6; 4.1; 91405. (as reported). - Manufacturing: - Manufacturing including aluminium growth: 12.7%; including industrial sector expansion by Mozal Phases I & II. - Mozal aluminium production 2004: 547,606 tonnes (2003: 409,407 tonnes) = 33.8% increase. - Manufacturing excluding aluminium growth: 5.2%. - Electricity and water: - Sector growth: 5.7%; electricity sub-sector 6.1%. - Energy production for national market grew by 12% despite Cahora Bassa rehabilitation limiting exports. - Construction and roads: - Construction sector decrease: -14.6%. - Road rehabilitation kilometres (2002,2003,2004): 714; 827; 819. - Routine maintenance (2002,2003,2004): 11,613; 10,592; 9,653. - Transport and communications: - Sector growth: 16.4% in 2004 driven by air transport (Air Transport growth: 4.2; 156.9; 238.2 for 2002–2004). - Telco expansion: entry of VODACOM as second mobile operator. - Tourism, restaurants and hotels: - Tourism revenue (BOP indicator): 95.3 million USD. - New investments approved in 2004: approximately 480 million USD. ### IV.2 Monetary and foreign exchange sector — objectives, execution and outcomes - Monetary programme medium-term objectives for 2004: - Inflation: should not rise above 11%. - GDP Growth Rate target: rise by 8%. - Bank of Mozambique Net Domestic Assets expansion target: 8,608 billion Meticais. - Net Foreign Reserves balance target: 778 million USD. - Money Supply expansion target: 15%. - Credit to the economy expansion target: 18.4%. - Execution and key aggregates (reported values vary across tables; preserved as reported): - Net Domestic Assets (billions of Meticais) — Dec/03 reported 1,577; Dec/04 reported -7,260.5. - Net International Reserves (millions USD): series include 738; 741; 747; 837; 850; 816.7. - Money Supply (balance variation) series: 18.7; 15.1; 16.4; 11.7; 6.3; 15.0. - Credit to the Economy (balance variation) series: -1.1; 3.6; 1.1; -1.1; -5.6; 18.4. - Annual inflation (%): 13.8; 13.5; 13.3; 11.1; 9.1; 11.0. - Monetary outcomes and drivers: - Monetary Base increase greater than expected (approximately 68.4 billion Meticais reported). - Net Foreign Assets higher than expected (736 billion Meticais reported). - Money Supply annual variation: 6.1% (actual) vs planned 15%. - Annual inflation (IPC Maputo): 9.1% (actual) vs expected 11%. - Monetary policy instruments and interventions: - IMM interventions including Pre-announced Treasury Bills weekly (terms 1 to 6 days; 91 to 182 days). - Liquidity frozen reported: approximately 10,414 billion Meticais frozen in December 2004 (compared with 5,188 billion same period 2003); other context reports 1,989.29 billion Meticais frozen via IMM. - Net sales of foreign exchange exceeded 2003 by approximately 46.7 million USD. - IMM rates revised end-September: Permanent Outstanding Liquidity Facility rate lowered from 18.5% to 13.5%; Permanent Outstanding Absorption Facility rate lowered from 8.25% to 6.25%. - Foreign exchange operations: - Foreign currency sold on Interbank Exchange Market: 104.3 million USD. - Foreign currency purchased on Interbank Exchange Market: 16.6 million USD. - Net volume of sales: USD 87.7 million. ### IV.3 Money supply, credit, interest rates and exchange rates - M2 aggregate December: 34,236.7 billion Meticais = annual variation 6.1% (ceiling 15%). - M2 components: Notes and Coins in Circulation increased by 22%. - Weight of Metical within M2: 49% in Dec 2002; 52% in Dec 2003; 60.3% in Dec 2004. - Credit to the Economy: - Credit balance: 13,512.5 billion Meticais = annual reduction of 5.6% (vs –1.1% in Dec 2003). - Retrenchments: 1,177 billion Meticais; recovery of mature loans: 144 billion Meticais. - Annual variation (negating Metical appreciation): 24.5%. - Foreign exchange credit share of credit stock: 58% in Dec 2004 vs 56% in Dec 2003. - Interest rates: - Bank of Mozambique IMM rates: FPC to 13.5%; FPA to 6.25%. - Average rates: Treasury Bills 10.9%; Monetary Authority Bills 6.4%; Exchange Liquidity 8.9%. - Domestic currency credit interest rate (one-year) fell from 28.1% (Dec 2003) to approximately 23.7% (2004). - Domestic deposit rates fell from 12.6% to 9.7%; spread reduced to ~14%. - Foreign currency credit interest rose from 6.7% to 8.4%; foreign currency deposit rates rose from 1.1% to 1.8%. - Exchange rate behaviour: - Metical strengthened vs USD: annual appreciation from 0.01% (Dec 2003) to approximately 21% (Dec 2004). - Parallel market Metical strengthening vs Dollar: 20.8% in 2004; average official vs parallel exchange-rate difference ~2.6%. - Metical vs Rand: depreciated 8% in first six months 2004 then appreciated 4% by December 2004. ### IV.3 Inflation (indices and drivers) - MABENA (Maputo, Beira, Nampula combined) accumulated inflation Jan–Dec 2004: 9.3%. - Maputo annual inflation (Dec 2004): 9.1%. - Beira annual inflation (Dec 2004): 8.5%. - Nampula annual inflation (Dec 2004): 11.9%. - Inflation drivers: - Deceleration associated with real sector performance, moderate Money Supply expansion, positive public accounts, and Metical appreciation. - Non-food goods accumulated variation: 4.8%; housing prices accumulated variation: 22.4% to December (linked to rising oil prices and price adjustments). - Concern over Maputo city's price index rising tendency despite deceleration. ### IV.4 Balance of payments and external sector — 2004 outcomes - Current Account deficit: 843 million USD (reduced from 953 million USD in 2003). - Capital Account: capital flow increase from 395 million USD (2003) to 463 million USD (2004); overall capital account decreased. - Foreign direct investment: fell from 342 million USD (2003) to 241 million USD (2004). - Exports value 2004: 1,504 million USD (increase of 460 million USD vs 2003). - Major export changes (10^6 USD, 2003 → 2004, % change): Shrimp 25.9 → 90.3 (248.5%); Cashew 0.2 → 1.6 (715.3%); Cotton 16.5 → 32.8 (98.9%); Sugar 0.8 → 35.5 (4340.6%); Wood 13.3 → 28.5 (114.6%); Electricity 58.9 → 102.3 (73.6%). - TOTAL exports line reported: 189.9 → 472.6 (148.9%). - Imports 2004: 2,035 million USD (increase of 294 million USD vs 2003). - Services balance deficit: increased from 257 million USD (2003) to approximately 312 million USD (2004). - Global deficit largely financed by reserve assets. ### V. Principal sectoral developments — social sectors (selected) - Education 2004: - Student population growth: EP1 increased by approximately 8.7%; EP2 increased by approximately 15%. - EP1 actual students 2004: 3,071,564; Planned 2004: 3,127,624; % Execut. 98.2; % Growth 04/03: 8.7. - EP2 actual students 2004: 409,279; Planned 2004: 422,621; % Execut. 96.8; % Growth 04/03: 15.1. - Total actual students 2004: 3,670,991; Planned 2004: 3,731,303; % Execut. 98.4; % Growth 04/03: 9.9. - EP1 net education rate 2004: 75.6%; EP1 gross admissions rate 2004: 137.6%. - School network actual total 2004: 9,659; Planned 2004: 9,710; % Executed 99.5; % Growth R04/R03: 5.3. - Teacher training total actual 2004: 12,136; Plan 2004: 11,144; % Plan Executed 108.9; % Growth R04/R03 13.0. - Total teachers actual 2004: 63,668; Plan 2004: 67,239; % Executed 94.7; % growth R04/R03 13.4. - Professional training coverage of teachers: EP1 trained 55%; EP2 66.5%; ESG1 53.4%; ESG2 81.6%. - CRESCER pilot districts: 20; Teachers involved: 10,180 (about 17% of 58,332 teachers in Basic Education). - Quality Improvement (QIF) 2004: total distributed 2,524,239 USD amongst 27 projects. - Students enrolled in public higher education institutions 2004* provisional: Women 7,117; Total 21,738. - Health and HIV/AIDS: - Coverage <1 year DPT3 and Hepatitis B 3-23 months: 95%; 96% reported in targets. - Number of pregnant women/newborns receiving PMTCT prophylaxis reported 8000; 4000 (baseline/actual); projections 15000 20000. - Number of people on antiretrovirals reported: 4000; 8000; projections 10000 29000. - Water and sanitation targets: - % Population with access to drinkable water: 41%; 41%; projections: 43.4% 45.8%. - % Population with access to sanitation services: 35%; 35%; projections: 37% 39%. ### V.3 Good governance, legality, justice and decentralisation — reforms and implementation - Public sector reform and decentralisation: - Drafting/revision of laws and decrees including revision of Law 8/2003, Ministerial Decree nº80/2004, new General Civil Servant Statute; creation of regional training institutes; revitalisation of State Information and Documentation Centre. - Start of implementing Decree nº 15/2000 in multiple provinces; pilot Public Service 'One Stop Shops' (BUAPs) begun. - Finance, procurement and auditing reforms: - New CFMP plan integrated into PES and State Budget 2005 methodology; work on e-SISTAFE; Council of Ministers approved legislation to establish a Tax Authority by Decree 5/2004 (1 April 2004) and submitted to Parliament on 7th August 2004. - Draft legal charter to improve procurement transparency to be considered in first quarter 2005. - Financial sector and micro-finance: - Forensic audit of Banco Austral tendered; limited response; further attempts to engage LEBOUF and PriceWaterhouse. - Implementation planning for IAS in financial sector; diagnostic studies TORs and financial arrangements prepared for BIM, BAu, BSTM and BCI/BF. - New Financial Institutions Law regulations approved in July 2004; Micro-Finance Law revision completed (Revised Law nº15/99); LFL to be discussed in Parliament in 2005. - Justice and public order: - Long-term Reform Programme being prepared; training delivered (detailed execution percentages preserved where reported: e.g., 41 judicial magistrates trained in land, environment, forestry and wildlife law (68% execution)). - Multiple legal code reforms advanced: Civil Proceedings Code, Penal Code, Civil Registry Code, Public Notary Code, Judicial Organisation Law and others submitted to CIREL or Parliament as reported. - Infrastructure investments in registries, prisons and police facilities; computerisation and equipment procurement underway. - Anti-corruption: - National Survey into Governance and Corruption launched 27 November 2003; analytical report being prepared; survey into corruption in judiciary conducted; anti-corruption strategy approved and implementation begun. ### Public finance and budget execution — 2004 planning and outcomes - State Budget 2004 planned totals (billions of Meticais): - State Revenue: 17,810.5; Current revenue: 17,752.5; Capital revenue: 58. - Global Expenditure (excluding financial operations): 33,602.3; Current: 19,270.2; Investment: 14,332.1. - Financial operations: 1,691; Deposit operations: 1,201.7; Credit operations: 489.3. - Budget deficit: 17,482.8. - Budget execution 2004: - Budget execution stood at 17,071 billion Meticais or 96% of the sum planned in the Budget Law (16% increase vs previous year). - Tax revenue component: 14,683 billion Meticais of total execution. - Execution rates: total revenue execution 96%; current expenditure execution 98%; investment expenditure execution 90.3%; overall current+investment 94.9%. - Execution in PARPA priority areas: 63.3% (target 65%). - Capital expenditure 2004 actuals: - Capital expenditure: 12,880 billion Meticais (Internal: 4,074; External: 8,806); execution rate 89.9% of Budget Law plan. - PARPA priority-area expenditure (billions of Meticais): - TOTAL EXPENDITURE IN PRIORITY AREAS: 16,622.7 (2003); 19,362.3 (2004). - EDUCATION: 4,816.5 (2003); 6,322.0 (2004). - PRIMARY AND SECONDARY EDUCATION: 3,982.9 (2003); 5,369.0 (2004). - HIGHER EDUCATION: 833.6 (2003); 953.0 (2004). - HEALTH: 3,494.4 (2003); 3,332.1 (2004). - HIV/AIDS: 64.1 (2003); 140.6 (2004). - INFRASTRUCTURE: 2,930.9 (2003); 4,187.9 (2004). - ROADS: 1,916.5 (2003); 3,223.9 (2004). - WATER AND PUBLIC WORKS: 1,014.4 (2003); 964.0 (2004). - AGRICULTURE AND RURAL DEVELOPMENT: 1,676.5 (2003); 1,333.0 (2004). - GOVERNANCE, SECURITY AND THE JUDICIAL SYSTEM: 2,359.8 (2003); 2,912.7 (2004). - Shares (as % of total expenditure excl. Interest on public debt) preserved as reported (e.g., EDUCATION: 18.5%; 20.7%; HEALTH: 13.4%; 10.9%). - Nominal increase in priority-area expenditure: 16,622 billion Meticais (2003) → 19,362 billion Meticais (2004), a nominal increase of 16.5%. ### Institutional, legal and procurement reforms — selected progress - Procurement: approval of legislation based on international principles concerning procurement/contracting for public works, goods and services. - Auditing: revision of functions of internal and external auditing institutions; Law being prepared. - e-SISTAFE implementation: pilot projects completed; target to reach 60% of State Budget in SISTAFE, medium-term target 100%. - Tax Authority law: Decree 5/2004 submitted to Parliament; aim to create Tax Authority in 2006. - Programme-based budgeting: methodology development and pilot in 5 sectors; introduction in State Budget preparatory cycle for 2006/2007. ### Key macro-fiscal and external indicators (selected series and projections as presented) - Nominal GDP (billions of Meticais series): 113,810.7; 137,424.8; 159,912.0; 184,289.0; 208,813.0; 235,193.0. - Real GDP growth (% series): 7.8; 7.2; 7.7; 7.4; 6.4; 6.4. - CPI (annual average): 13.4; 12.6; 8.0; 7.3; 6.5; 5.9. - Net international reserves (end period): 738; 960; 900; 902; 994; 1,123. - External current account after grants (percent of GDP series): 9.2; 5.8; 7.1; 6.8; 9.2; 7.5. - Overall balance after grants (percent of GDP series): -4.5 (2003); -4.4 (2004); subsequent series preserved as presented. *Source: ECONOMIC AND SOCIAL PLAN EVALUATION 2004 (as presented in the provided content).* ### ANNEX 1 – SIMPLIFIED MATRIX OF PRINCIPAL INDICATORS .....................95 ### ANNEX 1 – SIMPLIFIED MATRIX OF PRINCIPAL INDICATORS ### I. INTRODUCTORY NOTE - Evaluation conducted during the final year of the Government's Five-Year Programme, 2000-2004. - Evaluation structured to: - (i) improve the consistency and coherence of the various planning instruments; and - (ii) monitor and evaluate the implementation of PARPA. - Document divided into five main chapters: International Overview, National Social and Demographic Overview, National Macroeconomic Overview, Principal Developments by Sector and Budget Execution. - 2004 highlights: - continued and consolidated public sector reforms; - notable growth in social and economic infrastructure; - signs that the Mozambican economy is continuing to grow at the planned rate, inflation under control, and the Metical appreciated strongly; - Government honoured budget execution commitments, channelling more resources into PARPA-prioritised sectors and keeping budget execution rates within legal limits. ### II. INTERNATIONAL OVERVIEW — Key findings and risks - World economy: - estimated 5% growth rate in 2004 (compared with 3.9% in 2003). - Growth largely driven by North American and Asian economies (Japan and China). - Latin America showed signs of recovery; African economies performed relatively well. - Oil and interest rate context: - mid-August oil price: 44.7 USD per barrel. - end-of-year oil price: fluctuated between 45 and 50 USD per barrel. - Interest rates tended to rise in the second half of 2004 following movements of the United States Reserve Bank. - Fiscal deficits of advanced economies: 3.4% of Gross Domestic Product in 2004. - United States: - GDP growth estimated at 4.4% in 2004 (compared with 3% in 2003). - Federal funds increased five times in the second half of the year to 2.25%. - Industrial production: 4.4%. - Unemployment in December: 5.4% (compared with 5.7% in 2003). - Japan: - Growth estimated at 4% in 2004 (compared with 2.5% in 2003). - Exports: 14% growth. - Private consumption: 3.4% growth. - Industrial production (December): 1.8% year-on-year. - Unemployment December 2004: 4.4% (compared with 4.9% in December 2003). - European Union (Euro area): - GDP growth 2004: 1.8% (0.6% in 2003). - GFFC contribution: 2.4%; private consumption: 1.2%. - Industrial production: 1%. - Unemployment December 2004: 8.9% (unchanged from December 2003). - China: - Economy grew by 9.5% in 2004 (compared with 9.3% in 2003). - GFFC contribution: 25.8% of growth compared with the previous year. - Retail sales grew by 14.% throughout the year. - Inflation around 4% in 2004 (1.2% in 2003). - Emerging economies: - Developing countries' GDP grew by approximately 6.6% in 2004 (compared with 6.1% in 2003). - International trade increased by about 9% in 2004; exports approximately 11%. - Positive results in Brazil, North Korea, Russia, Argentina, Chile, Mexico and India with growth rates between 4 and 7%. - Inflation in Venezuela, Egypt and Russia between 10 and 20%. - Africa: - Aggregate GDP growth estimated at 4.5% for 2004 (4.3% in 2003). - Average inflation rate: 8.4% (compared with 10.3% the previous year). - Zimbabwe: - estimated growth rate for 2004: – 5.2% (compared with – 9.3% in the previous year). - inflation approximately 350% in 2004 (431.7% in 2003). - Other SADC economies (excluding Mozambique, South Africa, Zimbabwe): growth 4.2% in 2004 (3.4% in 2003). - SADC inflation between 7 and 9% between 2003 and 2004 (excluding Angola and Zimbabwe). - South Africa: - GDP growth in 2004 estimated at 2.6% (compared with 2.8% in 2003). - Unemployment estimated at 27.8% as at March 2004. - Inflation in 2004: 1.4% (5.8% in 2003). - Rand exchange rate at end-2004: 5.6 Rands to the American Dollar (6.7 at end-2003) — a 16% appreciation in twelve months. - Rand appreciated approximately 37% against the Dollar between 2002 and 2004. - South African Reserve Bank reduced the discount rate by 7.5% in 2004. - Global outlook and risks: - Relatively sustainable recovery expected over 2004–2005, but risks remain linked to oil prices and developed economies' fiscal deficits. - Need to ensure more equitable growth across regions. ### III. NATIONAL SOCIAL AND DEMOGRAPHIC OVERVIEW / MDG REVIEW — Progress and targets - Context: - Annual Review tracks progress towards the Millennium Development Goals (MDGs). - First comprehensive five-year MDG review scheduled for September 2005 (UN Millennium +5 Summit). - PARPA I is the principal strategic tool for MDG delivery and is being revised in 2005. 1. Eradicate Poverty and Food Insecurity - Goal: Halve, between 1990 and 2015, the proportion of people whose income is less than one dollar a day. - Latest Household Survey (IAF) 2002–2003: - 54% of the population living in poverty (less than US$1 per day), down from 69% in 1996/7. - PARPA I target of reducing poverty incidence below 60% by 2005 has been met. - Projection/extrapolation: - PARPA I extrapolation target: reduce proportion in poverty to 44% by 2015. - Note: full impact of HIV/AIDS yet to be felt; recommendation to incorporate more sophisticated poverty measures into PARPA II. 2. Attain Universal Primary Education - Goal: Ensure that by 2015 children everywhere complete a full course of primary schooling. - Net enrolment rate for EP1 (first 5 years of primary schooling) in 2004: 75.6% (up from 43.6% five years earlier). - Expansion: average annual increase of around 3,300 new schools per annum since 1999. - Concern: EP1 repetition and completion rates need to increase dramatically. - EP1 repeating students in 2004: around 21% of all students (21.9% in 2003). 3. Promote Gender Equality - Goal: Eliminate gender disparity in primary and secondary education preferably by 2005 and at all levels by 2015. - 2004 figures: - Net enrolment rate for girls in EP1: 73.2%. - Female participation rate at EP1: 45.9%. - Female participation rate at EP2: 40.7%. - Comparable 2003 figures: 45.3% (EP1 participation) and 40.0% (EP2). 4. Reduce Infant Mortality - Goal: Reduce by two-thirds (1990–2015) the under-five mortality rate (U5MR). - U5MR: - 1997 DHS: 201 per 1,000 live births. - 2003 DHS: 180 per 1,000 live births. - Immunisation: - Diphtheria, Tetanus, Pertussis and Hepatitis B vaccination coverage in 2004: 96%. - Target to meet two-thirds reduction from 1990: 82 deaths per 1,000 live births by 2015. - Note: faster progress required given HIV/AIDS impact. 5. Improve Maternal Health - Goal: Reduce by three-quarters (1990–2015) the maternal mortality ratio. - Baseline: - 1995 estimated maternal deaths: 1,062 per 100,000 live births. - 2015 target implied: 266 per 100,000 live births. - Recent estimate: - 2003 IDS: maternal mortality around 408 deaths per 100,000 live births. - Suggests reduction of more than half in ten years; extrapolation suggests 2015 target is feasible. 6. Fight HIV/AIDS, Malaria and Other Diseases - HIV/AIDS: - Goal: Have halted by 2015 and begun to reverse spread of HIV/AIDS. - Adult HIV prevalence rate in 2002: 13.6% (sentinel surveillance of pregnant women). - 2004 antiretroviral treatment: about 8000 people receiving treatment, including more than 4000 pregnant women for PMTCT (prevention of vertical transmission). - Government actions: nationwide education/information/communication campaigns; Voluntary Counselling and Testing Centres; improved laboratory diagnostics; introduction of antiretroviral treatment. - Malaria and other diseases: - Goal: Have halted by 2015 and begun to reverse incidence. - Malaria challenge exacerbated by HIV/AIDS. - 2003: 17.8% of mothers with children under five possessed mosquito nets (12.2% in rural areas). 7. Guarantee Environmental Sustainability - Goal: Halve by 2015 the proportion of people without sustainable access to safe drinking water. - 2004 water coverage: - Rural areas: 43.2% (increase of 3.8% on 2003). - Urban and peri-urban areas: 36.8% (increase of 0.8% on 2003). - Note: population growth rate estimated at 2.4%; significant investments required to meet 2015 target. ### IV. NATIONAL MACROECONOMIC OVERVIEW — Strategy, objectives and preliminary 2004 results - Policy focus in 2004: attain objectives of the Government Programme (Plano do Governo, 2000–2004) with priority actions to support sustained economic growth and reduce absolute poverty and social inequalities through PARPA. - PARPA objectives: - promote sustained economic growth, particularly via rural development; - extend and improve socio-economic infrastructure; - develop human resources via increased quantity and improved quality of education and health services and strengthen social protection for the poorest and most vulnerable. - Principal macroeconomic objectives for 2004: - achieve growth in Gross Domestic Product in the region of 8%; - ensure average annual inflation rate restricted to 8 - 9%; - achieve approximately 2% growth in exports of goods (excluding those from the large-scale projects); - continue creating an environment that attracts investment while ensuring responsible environmental management; - expand and improve quality of public education, health and judicial services and construct basic water, sanitation and road infrastructure. - Preliminary 2004 results: - 7.2% growth in GDP; - 4.6% growth in production compared with the planned 4.5%; - accrued inflation: 9.3% (MABENA) and 9.1% (Maputo); - 21% appreciation of the Metical; - 1451.9 million USD of goods exported (planned: 1274.5 million). ### IV.1 GLOBAL AND SECTORAL PRODUCTION — Activity and sectoral growth rates - Overall: - 4.6% growth in economic activity in 2004 relative to 2003, mainly due to manufacturing, mining, transport and communications. - Manufacturing contribution driven by Mozal's increased productive capacity (start of second aluminium production phase in last six months of 2003). - Excluding aluminium production, overall production rate increased by 2.2%. - Mining growth largely due to Pande Temane gas field beginning large-scale natural gas production in February 2004. - Transport sector benefited from increased air passengers and entry of a second mobile phone operator (VODACOM). - Negative: reduction in construction. - Global and Sectoral Production - % growth rates in volume (as presented): - Production 2002 2003 2004 - Agriculture, fisheries & forestry 10.0 8.6 9.1 - 7.3 9.8 9.0 - 23.3 17.4 12.8 - Timber 18.3 -8.7 5.6 - Fishery -4.6 11.1 -3.8 - Mineral Extraction Industry 52.1 31.6 215.7 - Manufacturing Industry 3.9 14.9 12.7 - Electricity and Water 10.2 -12.6 5.7 - Construction 104.6 -7.6 -14.6 - Trade 1.1 5.3 -0.1 - Repair Services 4.0 2.1 0.1 - Restaurants and Hotels 2.8 8.6 1.1 - Transport & Communications -8.0 8.6 16.4 - Financial Services 1.7 0.8 0.9 - Property Rental 2.5 2.4 2.5 - Services to Business 12.0 2.0 1.9 - Services to Government 1.5 6.1 5.6 - Other Services 7.1 9.7 8.5 - Total Production 16.7 4.8 4.6 - Total Production wtht aluminium 17.1 2.3 2.2 - Total Production wtht aluminium and gas 16.8 2.4 1.3 - Total Production wtht large-scale projects 4.6 7.4 5.1 - Sectoral note: - Significant mining and aluminium impacts drive headline production figures; exclusion of large-scale projects yields markedly lower growth rates. *Annex title: ANNEX 1 – SIMPLIFIED MATRIX OF PRINCIPAL INDICATORS (Economic and Social Plan Evaluation 2004).* ### conclusion of the construction phase at Mozal II and Temane and by the ### _cr05310 - conclusion of the construction phase at Mozal II and Temane and by the ### Overall macroeconomic and sectoral outcome (2004) - Overall economic growth rate: 4.6%. - Traditional (non-large-project) sectors production growth: 5.1%. - Agricultural/livestock sector growth: 9.1%. - Construction sector overall change: decrease of 14.6% (attributed to conclusion of large-project construction phases and incomplete road programme execution). - Without large-scale projects, negative construction-phase effects appear offset by positive effects from project entry into production. ### A. Agriculture, livestock and forestry — production and resilience - Agricultural season 2003/2004: irregular rains early (October–December 2003), improved rainfall end-December and Q1 2004, raising food crop production. - Total sown area: 4,027,000 hectares. - Cereals: 55% of sown area. - Cassava: 27% of sown area. - Vegetables: 18% of sown area. - Sown land losses: approximately 111,095 hectares = 2.7% of total sown area; affected about 75,000 families. - Registered regional agricultural production growth in 2004: 9%. - Business production and family cash crop production (excluding own consumption): 11.7% growth. - Exports increased by 10.5% in 2004. - Cotton production increase: 69.9% (noted also as 79.1% elsewhere for recovery in export crops—both figures appear in source tables; preserve both as reported). - Cashew nuts production: -32.6%. - Copra production: -3.1%. - Sugar cane production: -3.3%. - Cashew-specific actions: technical assistance for cooperatives’ processing factory; distribution of approximately 900,000 cashew tree saplings. - Family consumption production growth: 6.9%. - Country cereal shortage: 430,000 tonnes (mainly rice and wheat), covered by imports. Agricultural production (% volume growth rates) — selected aggregates (as reported) - Total (2002, 2003, 2004): 7.3, 9.8, 9.0. - Business (2002, 2003, 2004): 57.2, 109.3, 10.5. - Family Total (2002, 2003, 2004): 5.2, 3.4, 8.8. - Family Produce Sold (2002, 2003, 2004): 9.5, 4.3, 12.1. - Own Consumption (2002, 2003, 2004): 2.9, 2.8, 6.9. Selected crop-specific volume growth rates (2002, 2003, 2004) - EXPORT CROPS total: 17.3, -4.4, 10.5. - Cashew: -6.4, 27.2, -32.6. - Cotton: 16.8, -34.8, 69.9. - Copra: -5.9, 14.7, -3.1. - Sugar Cane: 127.8, 21.9, -3.3. - Tea: 39.3, 0.9, 19.2. - BASIC FOOD CROPS total: 4.8, 13.6, 6.0. - Maize: 8.3, 7.9, 16.1. - Rice: 1.6, 8.5, -5.5. - Cassava: -0.5, 4.2, 4.6. - Shelled Peanuts: 0.7, 0.1, 19.6. - Beans: 14.9, 1.7, 7.1. - Horticulture: 7.2, 60.5, 10.5. - Onions: 45.3, 105.6, -22.3. - PRODUCTS FOR INDUSTRY total: 98.5, 80.5, 28.4. - Tobacco: 58.3, 73.2, 68.3. - Tomato: 148.3, 86.5, 0.0. - TOTAL (selected table): 14.9, 20.5, 11.7. Family sector trade (% volume growth rate) — selected aggregates - EXPORT PRODUCTS total (2002, 2003, 2004): -1.3, -4.7, 17.3. - BASIC FOOD PRODUCTS total: 4.1, 5.4, 7.8. - Maize: 8.1, 10.0, 15.0. - Rice: 0.6, 19.0, -6.5. - PRODUCTS FOR INDUSTRY total: 74.6, 8.7, 33.1. - Tobacco: 56.7, 40.9, 46.9. - TOTAL family sector sale of produce: 9.5, 4.3, 12.1. Livestock and forestry - More than a million cattle in the country; progress towards exceeding the 1980s peak of 1,500,000 cattle. - Livestock distributions under restocking programmes: - Approximately 110 head of cattle distributed in specific districts. - 10 rams acquired for breeding/distribution. - 1,680 small ruminants distributed across named districts. - 9 pigs distributed in Nipepe district. - Forestry and timber subsector growth in line with 2003: 5.6%. - Tree trunks produced in business sector: 111,523 trunks. - Extraction shares: Cabo Delgado 38%, Zambezia 21%, Sofala 17%. ### B. Fisheries - Overall fisheries production change: decrease of 3.8% in 2004. - Business sector fisheries production: -3.2%. - Family (small-scale) sector fisheries production: -4.4%. - Family produce sold: -5.5%. - Own consumption: -3.2%. - Artisanal vs industrial details: - Kapenta production in business sector increased by 67.6% in 2004. - Industrial artisanal subseries show large variances (e.g., Kapenta artisanal: 46.9, 16.2, 67.6 for 2002–2004). - Shrimp (industrial): -10.2, -8.3, -26.3 (2002–2004). - Exports: approximately 20,500 tonnes of seafood exported in 2004. - Policy/activity responses: - Control of fishing on the Sofala Bank to allow shrimp stocks recovery. - Promotion of Kapenta and other stable resources. - Fisheries extension activities: experimental fishing, dissemination of techniques, outboard motor use, training in handling/processing/preservation. - Encouragement of fishing associations and savings/credit schemes. - Planned rehabilitation of the Angoche fishing port to stimulate northern regional activity. ### C. Mining industry - Total mineral production increase in 2004 vs 2003: 215.7%. - Natural gas production began February 2004 at Pande-Temane field; significant increases from June 2004. - National natural gas network extension planned to Ancuabe end-2005 (as reported). - Selected mineral volume growth rates (2002, 2003, 2004) - Coal: 57.7, -15.6, -55.0. - Bauxite: 6.1, 29.3, -23.9. - Marble Slabs: -34.8, 2.5, 33.6. - Marble Blocks: 41.6, -0.2, 36.5. - Gold: -23.2, 271.6, -10.8. - Tourmaline: 578.6, 370.4, 170.2. - Tantalite: 73.7, 302.3, 277.4. - Sand: 71.3, 72.4, 4.2. - Limestone: 78.4, 3.6, 18.2. - Dumortierite: -20.0, 0.0, 182.5. - Natural gas: 94.6, 4.1, 91405. (as reported). - Notes: - 55% decrease in coal production in 2004 due to mine transport system installation. - Tantalite production increased by 227.4% (opening/reopening of mines). - Increased small-scale production in Manica, Sofala, Zambezia, Nampula; government support and road rehabilitation provided. ### D. Manufacturing industry - Manufacturing industry overall (including aluminium) growth: 12.7% (significant expansion). - Industrial sector including aluminium expanded by 17.2% driven by Mozal Phases I and II. - Mozal aluminium production in 2004: 547,606 tonnes (2003: 409,407 tonnes) = 33.8% increase. - Manufacturing excluding aluminium growth: 5.2%. - Food industry growth: 9.8%. - Selected sub-sector % volume growth rates (2002, 2003, 2004) - Food Production: 6.5, 3.9, 9.8. - Drink & Tobacco: 10.4, 12.7, 3.7. - Textiles & clothes: -1.3, -7.6, 10.9. - Timber industry: -36.2, 33.6, -4.7. - Paper & graphic arts: 36.8, -9.5, 45.5. - Base metals / aluminium: -0.5, 51.1, 33.7 (base metals line), -0.5, 51.6, 33.8 (aluminium line). - Metal products, equipment & machinery: -3.3, 53.3, 5.0. - Furniture and other manufactured goods: -76.4, 161.5, 13.7. - TOTAL manufacturing: 3.8, 23.7, 17.4 (as reported). ### E. Electricity and water - Sector growth: 5.7%; electricity sub-sector growth: 6.1%. - Energy production for national market grew by 12% despite rehabilitation work at Cahora Bassa limiting exportable energy. - National grid extension to cover the entire country; rural electrification and generators installed in district administrative centres. - Water supply expansion to meet rural and urban population needs. ### F. Construction and roads - Construction sector drop in 2004: overall decrease of 14.6%. - Road programme kilometres rehabilitated/maintained decreased by 7% compared with 2003. - Road programme components (kilometres; series for 2002, 2003, 2004 as presented in chart): - Road rehabilitation: 714, 827, 819. - Occasional maintenance: 844, 396, 514. - Routine maintenance: 11,613, 10,592, 9,653. ### G. Business and trade - Business activity: -0.1% in 2004 (stability with a fall in level of imported goods). - Main internal trade activity concentrated in agriculture, fisheries, livestock, manufacturing (excluding Mozal), and mining — indicators show substantial increments and increased profit margins. ### H. Restaurants, hotels and tourism - Tourism/restaurant/hotel sector expanded steadily. - Tourism revenue (balance of payments indicator): 95.3 million USD. - New investments approved in 2004: approximately 480 million USD. ### I. Transport and communications - Sector growth: 16.4% in 2004, driven largely by air travel. - Transport and communications sub-sector volume growth rates (2002, 2003, 2004): - Rail Transport: 5.7, 68.8, 13.6. - Road Transport: -24.3, -4.2, 19.2. - Oil Pipelines: 17.8, -13.1, 3.5. - Sea Transport and Coastal Trade: -73.0, 171.7, 61.4. - Air Transport: 4.2, 156.9, 238.2. - Transport-related Services: 12.2, 29.3, -47.0. - Communication Services: 28.8, 2.8, 15.7. - Telecommunication expansion: entry of another mobile operator (VODACOM). - Road public transport: public transport decreased by –2.4% (factors include fuel price increases and fare elasticity); privately-owned bus/minibus sector ('semi-coletivos') contributed to road transport increase. ### IV.2 Monetary and foreign exchange sector — objectives, execution, and outcomes Monetary programme medium-term objectives for 2004 (as stated) - Inflation: should not rise above 11%. - GDP Growth Rate target: rise by 8%. - Bank of Mozambique Net Domestic Assets expansion target: 8.608 billion Meticais. - Net Foreign Reserves balance target: 778 million USD. - Money Supply expansion target: 15%. - Credit to the economy expansion target: 18.4%. Execution and key aggregates (selected reported values) - Net Domestic Assets (billions of Meticais) — Dec/03 reported 1,577; Dec/04 reported -7,260.5 (table entries vary across semesters; preserve reported values). - Net International Reserves (millions of USD): reported goal/Dec04 816.7 (table entries: 738, 741, 747, 837, 850, 816.7 across periods). - Net Foreign Assets (billions of Meticais): table entries include 7,103; 6,685.0; 6,756.9; 18,886; 19,549; 18,813. - Monetary Base (billions of Meticais): 8,682; -7,869.7; 8,675.8; 9.126.2; 10,433.4; 10,365 (as reported across periods). - Money Supply (balance variation): 18.7, 15.1, 16.4, 11.7, 6.3, 15.0 (periodic values). - Credit to the Economy (balance variation): -1.1, 3.6, 1.1, -1.1, -5.6, 18.4. - Annual Inflation (%): 13.8, 13.5, 13.3, 11.1, 9.1, 11.0 (periodic values). Monetary outcomes and drivers - Monetary Base increase greater than expected (approximately 68.4 billion Meticais reported in narrative). - Net Foreign Assets higher than expected (736 billion Meticais reported in narrative). - Net Domestic Assets fell below planned limit. - Credit to the economy expansion far lower than expected; Money Supply annual variation: 6.1% (actual) vs planned 15%. - Annual inflation (IPC Maputo): 9.1% (actual) vs expected 11%. Monetary policy instruments and interventions - Interventions in Interbank Money Market (IMM): issuance of Pre-announced Treasury Bills weekly with various short terms (including 1 to 6 days); greater volume of Treasury Bills including 91 to 182 days. - Liquidity freezing reported: approximately 10,414 billion Meticais frozen in December 2004 (compared with 5,188 billion in same period 2003). - Net sales of foreign exchange exceeded 2003 by approximately 46.7 million USD. - IMM intervention rates revised end-September: - Permanent Outstanding Liquidity Facility rate lowered from 18.5% to 13.5%. - Permanent Outstanding Absorption Facility rate lowered from 8.25% to 6.25%. - From 14th September, under Law nº 22/2004, Treasury Bills issued for State Treasury financing and monetary policy. Foreign exchange operations (quantitative) - Foreign currency sold on Interbank Exchange Market: 104.3 million USD. - Foreign currency purchased on Interbank Exchange Market: 16.6 million USD. - Net volume of sales: USD 87.7 million. - Meticais frozen via IMM: total of 1,989.29 billion Meticais (as reported in context). ### IV.3 Money supply, credit, interest rates and exchange rates Money supply (M2) - M2 aggregate in December: 34,236.7 billion Meticais = annual variation 6.1% (ceiling was 15%). - M2 decelerated by 12.6 percentage points relative to same period in 2003. - M2 components: Notes and Coins in Circulation increased by 22%. - Weight of Metical within M2: 49% in Dec 2002; 52% in Dec 2003; 60.3% in Dec 2004. Credit to the economy - Credit to the Economy balance: 13,512.5 billion Meticais = annual reduction of 5.6% (vs –1.1% in Dec 2003). - Retrenchments: 1,177 billion Meticais; recovery of mature loans: 144 billion Meticais. - Annual variation (negating Metical appreciation) registered at 24.5%. - Foreign exchange credit share of credit stock: 58% in Dec 2004 vs 56% in Dec 2003 (increase of 83 million USD in stock of FX credit). - Internal debt structure (largest shares in 2004): Business 21%, Industry 18%, Agriculture 11%; other sectors ~38% of total credit stock. Interest rates - Bank of Mozambique IMM rates reduced: - FPC rate to 13.5%. - FPA rate to 6.25%. - Average rates for Treasury Bills, Monetary Authority Bills and Exchange Liquidity fell to 10.9%, 6.4% and 8.9%, respectively. - Domestic currency credit interest rate (one-year term) fell from 28.1% (Dec 2003) to approximately 23.7% (2004). - Domestic currency deposit rates fell from 12.6% to 9.7%; spread between credit and deposit rates reduced to approximately 14%. - Foreign currency credit interest rate rose from 6.7% to 8.4%; foreign currency deposit rates rose from 1.1% to 1.8%. Exchange rate behaviour - Metical strengthened against USD: annual appreciation rate escalated from 0.01% (Dec 2003) to approximately 21% (Dec 2004) in narrative. - Drivers of Metical appreciation: weakness of USD internationally; increased supply of foreign exchange by Bank of Mozambique (liquid sales: 139.7 million USD in 2003 to 187 million USD in 2004); moderate monetary supply increase. - Parallel market Metical strengthening against Dollar: 20.8% in 2004; average official vs parallel exchange-rate difference ~2.6%. - Metical performance vs Rand: depreciated by 8% in first six months (2004) then appreciated by 4% by December 2004; overall better performance vs Rand in 2004 than 2003. Exchange market tables included monthly average MT/USD and MT/Rand rates for 2000–2004 with accumulated and annual growth rates (preserved in source). ### E. Supervision and regulation (banking) - Consolidation: merger between Banco Comercial de Investimento (BCI) and Banco de Fomento (BF) in first six months of 2004; total number of banks operating reduced to 10. - Legislative/regulatory strengthening: adoption of mechanisms and legislative revisions including the Credit Institution Law and the Financial Association Law recently approved by parliament. ### IV.3 Inflation (MABENA and city indices) - MABENA (Maputo, Beira, Nampula combined) accumulated inflation Jan–Dec 2004: 9.3%. - MABENA annual growth rate (Dec 2004): 9.3%. - Maputo annual inflation (Dec 2004): 9.1% (IPC Maputo also reported as 9.1%). - Beira annual inflation (Dec 2004): 8.5%. - Nampula annual inflation (Dec 2004): 11.9%. - Monthly and annual tables provided in source: - MABENA index Dec 2004: 184.7 (base Dec 1998 = 100); monthly variations and annual growth rates for 2002–2004 preserved in source tables. - Inflation drivers and composition: - Fall in inflation associated with real sector performance, moderate Money Supply expansion, positive public accounts, and Metical appreciation. - Non-food goods index increased in accumulated terms by 4.8%; housing prices accumulated variation: 22.4% to December (associated with rising oil prices and price adjustments). - Concern noted over Maputo city's price index rising tendency despite deceleration in accumulated/annual terms. ### IV.4 Balance of payments and external sector - Current Account deficit: reduced from 953 million USD (2003) to 843 million USD (2004). - Capital Account: decreased despite capital flow increase from 395 million USD (2003) to 463 million USD (2004). - Foreign direct investment: fell from 342 million USD (2003) to 241 million USD (2004). - Global deficit largely financed by reserve assets. - Value of exported goods in 2004: 1,504 million USD (increase of 460 million USD vs 2003). - Major exports: electricity, shrimp, sugar, cotton. - Volume of imports in 2004: 2,035 million USD (increase of 294 million USD vs 2003). - Services balance deficit increased from 257 million USD (2003) to approximately 312 million USD (2004). - Exports by product (10^6 USD, 2003 vs 2004, % change as reported) - Shrimp: 25.9 → 90.3 (248.5%). - Cashew (Amendoa de Cajú): 0.2 → 1.6 (715.3%). - Cotton: 16.5 → 32.8 (98.9%). - Sugar: 0.8 → 35.5 (4340.6%). - Wood: 13.3 → 28.5 (114.6%). - Electricity: 58.9 → 102.3 (73.6%). - Sasol (Gas): 31.3 → (others line included). - TOTAL exports: 189.9 → 472.6 (148.9%). - Imports (10^6 USD) — reported aggregate lines (source table): - Oil Derivatives, Electricity, Other goods, Total not Mozal, Mozal Imports, Gen. Total with respective figures as reported (preserve table values in source). ### V. Principal sectoral developments (social area start) - Education (2004): continued focus on access expansion and quality improvement; institutional capacity-building implemented. - Number of students in general education rose by approximately 10% in 2004 vs previous year. - Target attainment: 98.4% of target number of students in primary and secondary education was attained (as reported). *Source: _cr05310 - conclusion of the construction phase at Mozal II and Temane and by the (Economic and Social Plan Evaluation 2004) — IMF PDF content provided.* ### 2004. The student population in first and second level Primary Education (EP1 ### _cr05310 - 2004. The student population in first and second level Primary Education (EP1 and EP2) increased by approximately 8.7 and 15% respectively compared with the previous year. ### Enrollment growth and coverage (Primary and Secondary) - EP1 actual students 2004: 3,071,564; Planned 2004: 3,127,624; % Execut. 98.2; % Growth 04/03: 8.7 - EP2 actual students 2004: 409,279; Planned 2004: 422,621; % Execut. 96.8; % Growth 04/03: 15.1 - ESG1 actual students 2004: 168,798; Planned 2004: 158,418; % Execut. 106.6; % Growth 04/03: 19.0 - ESG2 actual students 2004: 21,350; Planned 2004: 22,640; % Execut. 94.3; % Growth 04/03: 16.7 - Total actual students 2004: 3,670,991; Planned 2004: 3,731,303; % Execut. 98.4; % Growth 04/03: 9.9 - EP1 gross admissions rate 2004: 137.6% (8.5% higher than 2003) - EP1 net education rate 2004: 75.6% - EP1 gross education rate 2004: 121.2% ### School network expansion and construction (2000–2004) - Overall school network total actual 2004: 9,659; Planned 2004: 9,710; % Executed 99.5; % Growth R04/R03: 5.3 - EP1 schools actual 2004: 8,373; Planned 2004: 8,418; % Executed 99.5; % Growth R04/R03: 3.7 - EP2 schools actual 2004: 1,116; Planned 2004: 1,121; % Executed 99.6; % Growth R04/R03: 17.5 - ESG1 schools actual 2004: 140; Planned 2004: 141; % Executed 99.3; % Growth R04/R03: 12.0 - ESG2 schools actual 2004: 30; Planned 2004: 30; % Executed 100.0; % Growth R04/R03: 3.4 - Realization of building new schools in 2004: 99.5% of plan, resulting in a 5.3% expansion of the network. ### Teacher training, recruitment and staffing (General Education) - CFPPs (Basic) daytime trainees actual 2004: 5,853; Plan 2004: 5,084; % of Plan Executed 115.1; % Growth R04/R03 12.7 - IMAPs (Mid-level) daytime trainees actual 2004: 4,040; Plan 2004: 4,186; % of Plan Executed 96.5; % Growth R04/R03 5.2 - IMAPs (Mid-level) evening trainees actual 2004: 2,243; Plan 2004: 1,874; % of Plan Executed 119.7; % Growth R04/R03 31.3 - Teacher training total actual 2004: 12,136; Plan 2004: 11,144; % of Plan Executed 108.9; % Growth R04/R03 13.0 - Number of teachers recruited for general education in 2004: approximately 13% higher than in 2003; plan realization 95% - Total number of teachers (General Education) 2004 (actual) by level and plan execution: - EP1 (1st–5th Class) actual 2004: 47,598; Plan 2004: 50,080; % Executed 95.0; % growth R04/R03 11.1 - EP2 (6th–7th Class) actual 2004: 10,743; Plan 2004: 11,713; % Executed 91.7; % growth R04/R03 17.6 - ESG1 (8th–10th Class) actual 2004: 4,568; Plan 2004: 4,545; % Executed 100.5; % growth R04/R03 29.7 - ESG2 (11th–12th Class) actual 2004: 759; Plan 2004: 901; % Executed 84.2; % growth R04/R03 17.7 - Total teachers actual 2004: 63,668; Plan 2004: 67,239; % Executed 94.7; % growth R04/R03 13.4 - Professional training coverage of teachers: - EP1 trained: 55% - EP2 trained: 66.5% - ESG1 trained: 53.4% - ESG2 trained: 81.6% ### Teacher training strategy and continuous professional development - Teacher Training Strategy (EFP) objectives: improve quality of education; coordinate fragmented training models; integrate initial, in-service and continuous professional development. - CRESCER system introduced in 2004: - Pilot districts: 20 - Teachers involved: 10,180 (about 17% of the 58,332 teachers in Basic Education) - CRESCER features: participative, cyclical, cascade training; implemented in ZIPs and supported by District Education Directorates and Teacher Training Institutions. - MINED–Universidade Pedagógica (UP) arrangements: - 2003: 559 in-service teachers with intermediate-level training admitted to degree courses at UP - 2004: 800 additional teachers entered UP for degree level courses - Other initiatives: school-based training trials; 400 teachers trained in Inclusive and Special Education. ### Gender, parity and protection measures - Proportion of girls: - EP1 girls increased from 45.3% (2003) to 45.9% (2004) - EP2 girls increased from 40.0% (2003) to 40.7% (2004) - ESG1 girls decreased from 40.6% (2003) to 40.2% (2004) - ESG2 girls decreased from 37.7% (2003) to 37.4% (2004) - EP1 net rate for girls: 73.2% - Actions to improve gender parity: - Formulated action plan to improve gender parity in pre-identified districts; to be launched with provincial representatives - Study initiated to include directive to improve gender parity in schools covered by Direct School Support (ADE) - Measures to combat sexual harassment and abuse of female students; a ministerial dispatch disseminated to schools ### Direct School Support (ADE) - Objective: create a school quality improvement fund, decentralise administrative resources to school level, managed by School Council. - Allocations: - Phase 2: sums ranging from 3.5 to 90 million meticais per school (depending on students and classes) - Phase 3: sums between 4.2 and 70 million meticais per school - Coverage: - Phase 2 benefited approximately 8,100 primary schools - Phase 3 benefited approximately 8,400 primary schools ### Literacy, adult education, technical/professional and distance education - Literacy and Adult Education: - Literacy centres operating 2004: 5,288 (10% above planned target) - Learners attending 1st and 2nd years 2004: 537,593; plan realization 94.8% - Learners attending 3rd year 2004: 123,314; plan realization 99.5% - Preparatory phase of radio and television literacy programme completed in 2004; implementation expected in 2005 - Technical/Professional Education: - Elementary education schools operating 2004: 11 (100% plan realization); students enrolled: 1,268 (66.3% plan realization); enrolments increased by 1.4% vs previous year - Basic level daytime courses in 25 schools: 19,878 students (99.7% plan realization); enrolments up 4.1% vs previous year - Intermediate level daytime courses in 7 schools: 3,516 students (104.5% plan realization); enrolments up 7.3% vs 2003 - Distance Teacher Training and Education: - Secondary Distance Education pilot project launched in Nampula province in 2004 - Basic level teacher training activities continued; intermediate level teacher training course by distance education launched ### Curriculum reform and measures to improve educational quality - New basic education curriculum introduction in 2004 for 1st, 3rd and 6th classes. - Main innovations of the new curriculum: i. Integrated curriculum for the seven basic education grades, knowledge structured by area rather than separate discipline. ii. National curriculum with a compulsory nucleus of knowledge, skills and learning outcomes; space for 'local curriculum'. iii. Promotion of learning cycles rather than academic years. iv. Introduction of Mozambican languages as languages of instruction through a bilingual approach. v. Introduction of English in the 3rd cycle (6th class). vi. Introduction of Vocational Training and Moral and Civic Education. - Teacher capacity-building conducted prior to implementation. ### Higher education expansion, quality and scholarships - Actions to prepare new Higher Education Law and systems: - Accreditation, evaluation and quality control system; accumulation and transfer of academic credits; distance education strategy; terms of reference for Preparatory Commission for CNAQ; transitional methodology for creation and operationalisation of IES. - Quality Improvement and Innovation Fund (QIF) 2004: - Total distributed: 2,524,239 USD amongst 27 projects - Allocations: 9 to higher education institutions; 3 to academic staff in UEM and UP; 15 for scientific research - Investment areas distribution: 52% equipment, 15% research, 7% educational materials, 7% staff post-graduate study, 7% technical assistance, 7% exchange visits, 7% rehabilitating infrastructure - Provincial Scholarship Programme 2004: - Total scholarships awarded: 202 (provincial breakdown presented) - Scholarships began to be awarded in Sofala, Zambezia and Cabo Delgado; management commissions established - Students enrolled in public higher education institutions (total women and total students, 2000/01–2004* provisional): - Total 2000/01: Women 4,301; Total 13,592 - Total 2001/02: Women 4,835; Total 14,169 - Total 2002/03: Women 5,245; Total 17,397 - Total 2003/04: Women 5,538; Total 17,225 - Total 2004*: Women 7,117; Total 21,738 - (*) Provisional data *Source: MINED (as presented in the document).* ### 1. Airports ### 1. Airports ### Airports — regulatory and infrastructure developments - Decree 39/98 concerning Air Transport and Air Activities was revised. New regulations were incorporated regarding transport licencing and air activities on domestic, international and private flights; - Decree 50/96 was revised regarding the sale of air traffic documents; - Technical aeronautical regulations (MOZ-CATs and MOZ-CARs) were created regarding air personnel, training, airport infrastructure and flight operations; - The Lichinga Airport was certified as an International Airport; - Documents are presently being analysed to transform Nacala Airport into a civil airport; - Negotiations are underway with the preferred candidate for the development and concession of Maputo Airport; - The Inhambane and Nacala routes have been opened to all national air operators; ### Safety — oversight and systems modernization - Activities are in progress to inspect and certify aeronautical equipment and materials; - The licencing process is being computerised; - Regulations are being approved concerning microlight aircraft and medical evacuations; - A computerised examination room is being established; ### Communications — Telecommunications initiatives - A pre-payment card was launched. Elements of the product marketing mix were identified; - Sales and post-sales services procedures were prepared as well as a training plan for all personnel dealing with the general public in Maputo, DATX, DATI, DATB and DATCC; - Tarrifs for service use were revised; - Legislation was prepared for creating a Universal Service Fund; - Financial procurement is in progress for installing land lines in the following areas: Dondo/Caia; Chimoio/Tete/Caia; Caia/Quelimane; Quelimane/Nampula; Nampula/Namialo/Nacala and Namialo/Pemba; *Source: _cr05310 - 1. Airports* ### 2. Mozambican Postal Service ### 2. Mozambican Postal Service ### Postal sector development - A strategy for developing the postal sector is being prepared; - A Universal Service Law is being prepared. ### Ports and Railways - The rehabilitation of the Dondo/Muanza line is nearing conclusion; - A contract is being signed with the winner of the international bidding process for the Beira Railway concession for a period of 25 years; - 15,210 sleepers were laid on the Cuamba/Lichinga line and 7021 on the Cuamba/Entrelagos line; - Development work was completed at Nacala port towards a special processing zone (fuel zone). ### Meteorology - A meteorological radar has been installed in Xai-Xai but is yet to start operating. Another radar is presently being installed in Beira; - Synoptic stations have been completed in Mapulanguene and Dindiza and those in Chigubo, Panda, Espungabeira, Mocuba, Milange, Guruè, Furancungo, Nicole, Cobuè, Mecula and Mueda are nearing completion; - Trials of automatic synoptic stations have been conducted in Zitundo, Combomune, Funhalouro, Changara, Fingoe, Morrumbala, Muite and Moma. ### V.3. GOOD GOVERNANCE, LEGALITY, JUSTICE AND DECENTRALISATION — overview - Good Governance is a fundamental condition for the success of the poverty reduction strategy. PARPA policies to promote good governance include: decentralisation; reform of public administration to meet citizen's needs; strengthening the capacity and efficiency of the legal and judicial system, improving public security and developing a programme to combat corruption at all levels. ### A. PUBLIC SECTOR REFORM AND DECENTRALIZATION - Public Sector reform involves decentralising and rationalising service provision structures and processes, improving the processes for the formulation and monitoring of public policies, professionalising Public Sector personnel, improving financial management and reporting and combating corruption. - Activities implemented under the Technical Unit's Public Sector Reform Plan and routine activities in other institutions are described. Key decentralisation and administration actions in 2004: - Preparing a bill for the revision of Law 8/2003 of 19th May concerning Local State Organs; - Approval of the Ministerial Decree nº80/2004 concerning links between Local Governmental Organisations and Community Authorities. - A new version of the General Civil Servant Statute was prepared after discussion at all government levels. - Three training institutes were created in Public and Local Government Administration in Matola (southern region), Beira (central region), Cabo Delgado and Nampula (northern region). - The State Information and Documentation Centre was revitalised by establishing a computerised registration system for State archives and beginning the process of preparing the National Document Management Policy. Ministry of State Administration activities: - Organisational and managerial norms were formulated for the central organs of Public Administration as part of the revision of the Central Government Organisational and Managerial Norms; - The process of implementing Decree nº 15/2000 of 20th June was monitored, concerning Community Authorities in Maputo, Sofala, Manica, Tete, Niassa and Cabo Delgado provinces; - The process of establishing Public Service 'One Stop Shops' (BUAPs) was begun; - The 4th National Municipality Conference was held; - In infrastructure, 30 tractors were acquired and distributed in 3 provinces to equip and improve the performance of local government; - Investiture ceremonies were held to install local government authorities after the second local government elections. Finance, procurement and auditing reforms: - The Ministry of Planning and Finance prepared a new CFMP plan incorporated into PES and State Budget 2005 methodology. - Emphasis on e-SISTAFE implementation, reform of State procurement, tax reform and strengthening internal and external auditing. - Work in progress with sectors to establish the methodology for preparing the 2006 State Budget. - Council of Ministers approved legislation to establish a Tax Authority by Decree 5/2004 of 1 April 2004, published in BR no. 13 and submitted to Parliament on 7th August 2004. - A draft of the legal charter to improve transparency and efficiency of the procurement system will be considered for approval in the first quarter of 2005. - A General Accountancy Plan was prepared; regulations concerning the auditing and monitoring process are being prepared. Financial sector and micro-finance: - The Attorney General's office put the task of conducting a forensic audit of Banco Austral out to tender; no companies operating in Mozambique, or LEBOUF in South Africa, responded. Further attempts have been made to encourage LEBOUF and PriceWaterhouse in South Africa to bid for the contract. - Under implementing IAS in the financial sector, Terms of Reference and financial arrangements were formulated for the diagnostic study of BIM, BAu, BSTM and BCI/BF in preparation for formulating the IAS transition plans. - To strengthen the institutional capacity of the Bank of Mozamibuqe and other regulatory authorities, draft regulations have already been prepared and are presently awaiting approval. - In micro-finance, the regulations of the new Financial Institutions Law were approved in July 2004 and the revision of the regulation in the Micro-Finance Law was completed (revised Law nº15/99). The law will only be discussed in Parliament in 2005 after the respective regulations have been sent to the Council of Ministers in 2005. Anti-corruption and governance diagnostics: - An analytical report is being prepared in response to the National Survey into Governance and Corruption, co-ordinated by USTRESP, launched on November 27th 2003. - A survey is also being conducted into corruption in the judiciary system. ### B. LEGALITY, JUSTICE AND PUBLIC ORDER - PARPA emphasises the State's responsibility for upholding justice and maintaining internal public order, requiring reform, capacity building and improvements in legal, judicial and public order systems. Justice sector reform and planning: - The long-term Reform Programme is being prepared to be presented to the Council of Ministers, including a planning, budgeting and monitoring system prioritising sector service provision. - Activities include: more effective use of Integrated Strategic Plan monitoring matrices in the Ministry of Justice; a joint planning exercise in the Justice sector; preparation of planning software for the Ministry of Justice. Training to improve professional performance (execution rates preserved where given): - 41 judicial magistrates trained in land, environment, forestry and wildlife law (68% execution); - Initital training was provided for 25 magistrates (100% execution); - Initial training was provided for 52 judiciary officers (200% execution); - Initial training was provided for 19 notaries and registrars (95% execution); - 16 trainers were trained in various areas; - Training was provided for 21 magistrates in civil proceedings and 18 in penal proceedings; - Capacity building activities were provided for 39 customs officers. Access to justice and legal reform: - Preparatory activities and activity planning are in progress to formulate the Community Tribunal Law. - A proposal for the Penal Proceedings Code was prepared and delivered to CIREL; - A bill for the Civil Proceedings Code was delivered to CIREL and is due to be debated in Parliament in April; - The preliminary report on the Penal Code was completed and submitted to CIREL; - The Law of Succession is in its initial phase of preparation; - The Reform of the Prison Organisation Law is in its initial phase of preparation; - The reform of the Civil Registration Code was submitted to Parliament; - Terms of the Judicial Organisation Law have been prepared and discussed at provincial level, including the legal base for including business sections; - The proposal for the reform of the Commercial Registration Code was prepared and delivered to CIREL and subsequently dispatched to Parliament; - The preliminary report on the Public Notary Code was completed and submitted to CIREL. Infrastructure, registry and notary investment: - A registry and public notary office is being built in Mopeia (Zambezia); - Prison infrastructure is being rehabilitated. A study is in progress for installing a sanitation system in the Central Prison. The solitary confinement block of Mabalane Prison was rehabilitated; - A cell block was built at the Matutuine Prison as part of a self-build pilot project. The solitary confinement block, administrative block, health unit and kitchen are still to be built. - Plans for the construction of the Xai-Xai Prison have been dispatched to the Ministry of Public Works and Habitation for approval. - Computer systems are presently being installed in Registry and Notary offices. Tenders were invited to acquire 50 computers with Internet facilities in the Provincial Directorates, with the exception of Maputo, Gaza and Niassa; - Rehabilitation work was carried out at the Zavala and Maputo Civil Registry Offices; the Tete and Milange Registry Offices, the 3rd Maputo Registry Office and the Monapo Civil Registry Office; - Three vehicles (including a minibus) and furniture were acquired for the Criminal Registry department; the Mueda Registry office and the Civil Registry offices of Balama and Nacala-Velha. Public Order, police infrastructure and training: - A police station at Magoanine (Matendene), a building for DIC-Gondola-Manica and a border post at Rotanda-Manica have all been completed. A police station is currently being built at the River Save/Inhambane Administrative Post. - Rehabilitation work is in progress at the Niassa Provincial Migration Office; the District Police Headquarters at Angónia (Tete), Nhamatanda (Sofala) and Moamba (Maputo); a Police Training Centre at Matalane and cells at the Maputo City Police Headquarters; - Training: 50 cadettes began a degree course in police sciences; 1238 youths enrolled for the PRM police training course; 20 senior investigators were recruited and trained under the ambit of criminal investigation sector reform; 700 police officers received Special Unit and Reserve training and 155 migration inspectors and 37 techincal assistants were trained. *Source: ECONOMIC AND SOCIAL PLAN EVALUATION 2004 — _cr05310 - 2. Mozambican Postal Service* ### Section 544 of the American Law concering external financing and other ### _cr05310 - Section 544 of the American Law concering external financing and other ### Overview - Mozambique participated in the 59th Session of the United Nations General Assembly, defending the position that the United Nations reforms will only be succesful if they contribute towards improving global government and strengthening multilateral involvement and service provision to member states, particularly developing countries. - During the Session, Mozambique participated in seminars on 'The Challenges of Eradicating Poverty in Mozambique' and 'The Challenge of Conflict Resolution in Africa'. ### Budgetary policy objectives (stated) - Maintain sustainable and inclusive economic and social development. - Ensure that public resources are utilized in an increasingly rigorous and rational manner. - Maintain a sense of social responsibility for implementing the poverty reduction strategy. ### State Budget for 2004 — planned totals (billions of Meticais) - State Revenue: 17,810.5 billion Meticais - Current revenue: 17,752.5 billion Meticais - Capital revenue: 58 billion Meticais - Global Expenditure (excluding financial operations): 33,602.3 billion Meticais - Current: 19,270.2 billion Meticais - Investment: 14,332.1 billion Meticais - Financial operations: 1,691 billion Meticais - Deposit operations: 1,201.7 billion Meticais - Credit operations: 489.3 billion Meticais - Budget deficit: 17,482.8 billion Meticais ### Budget execution and revenue performance (2004) - Budget execution stood at 17,071 billion Meticais or 96% of the sum planned in the Budget Law, a 16% increase compared with the previous year. - Tax revenue component: 14,683 billion Meticais of total execution. - Causes cited for fall in Tax Revenue: reduced commercial profits and the fall in the value of the USD and Rand against the Metical, raising the price of imports. ### Key revenue and expenditure figures (tables retained from source) - TOTAL REVENUE (selected): 15,359; 17,810; 14,579; 17,071; 22,226 (values presented across comparative columns in the source). - TAX REVENUE (selected): 14,191; 16,692; 13,627; 14,683; 18,409. - Income Tax: 3,254; 3,860; 2,413; 3,470; 4,694. - Taxes on Goods and Services: 6,921; 8,242; 6,529; 7,753; 9,520. - External Trade Tax: 2,165; 2,421; 2,229; 2,284; 2,765. - Other Taxes: 1,851; 2,169; 2,457; 1,176; 1,430. - NON-TAX REVENUE: 933; 787; 741; 780; 1,388. - ASSIGNED REVENUE: 106; 274; 210; 1,290; 1,747. - CAPITAL REVENUE: 129; 580; 319; 682. - CURRENT EXPENDITURE (selected totals): 16,568; 19,270; 15,743; 19,006; 22,605. - Personnel Expenditure: 7,579; 9,165; 7,383; 9,195; 11,045. - Goods and Services: 3,963; 4,193; 2,898; 3,966; 5,308. - Debt Repayment: 1,176; 1,228; 1,318; 1,321; 1,284. - Current Transfers: 3,127; 3,611; 2,945; 3,555; 4,003. - INVESTMENT EXPENDITURE (selected): 13,912; 14,332; 12,704; 12,880; 19,001. - Internal Financing: 4,129; 4,126; 3,240; 4,074; 5,763. - External Financing: 10,655; 10,206; 8,362; 8,806; 13,239. - Donations: 7,473; 5,422; 5,229; 7,576. - Credits: 3,028; 2,940; 3,577; 5,662. ### Global budgetary framework and execution rates - 2004 approved revenue target: around 17,810 billion Meticais, representing 14% of GDP. - Total expenditure including liquid loans fixed at 33,740 billion Meticais, or 26.8% of GDP. - Planned share financed by external resources: 47% of total expenditure. - Execution rate of total revenue: 96%. - Execution levels: - Current expenditure execution: 98%. - Investment expenditure execution rate: 90.3%. - Overall expenditure execution (current and investment): 94.9%. - Execution in PARPA priority areas: 63.3%. ### Financing flows (selected) - GLOBAL DEF. BEFORE DONATIONS: -15,156; -15,929; -14,342; -15,874; -22,706. - DONATIONS: 11,072; 10,948; 9,931; 10,053; 11,547. - GLOBAL DEFICIT AFTER DONATIONS: -4,084; -4,981; -4,411; -5,821; -11,159. - BM TRANSFER TO HIPC: 348; 329; 552; 484; 368. - CREDITS (Net): 4,471; 4,987; 5,081; 6,290; 7,872. - Disbursements: 5,408; 5,745; 5,672; 6,957; 8,692. - Amortization: -937; -758; -591; -667; -820. - NET INTERNAL CREDIT: -735; -335; -1,222; -953; 2,919. ### Capital expenditure execution composition (2004 actuals) - Capital expenditure currently stands at 12,880 billion Meticais. - Internal expenditure: 4,074 billion Meticais. - External expenditure: 8,806 billion Meticais. - Execution rate for capital expenditure: 89.9% of the total planned in the Budget Law. ### Expenditure execution in PARPA priority sectors (billions of Meticais and shares) - TOTAL EXPENDITURE: 27,345.0 (2003); 31,886.4 (2004). - Interest on Public Debt: 1,318.2 (2003); 1,321.4 (2004). - TOTAL EXPENDITURE EXCLUDING INTEREST ON DEBT: 26,026.8 (2003); 30,565.0 (2004). - TOTAL EXPENDITURE IN PRIORITY AREAS: 16,622.7 (2003); 19,362.3 (2004). - EDUCATION: 4,816.5 (2003); 6,322.0 (2004). - PRIMARY AND SECONDARY EDUCATION: 3,982.9 (2003); 5,369.0 (2004). - HIGHER EDUCATION: 833.6 (2003); 953.0 (2004). - HEALTH: 3,494.4 (2003); 3,332.1 (2004). - HIV/AIDS: 64.1 (2003); 140.6 (2004). - INFRASTRUCTURE: 2,930.9 (2003); 4,187.9 (2004). - ROADS: 1,916.5 (2003); 3,223.9 (2004). - WATER AND PUBLIC WORKS: 1,014.4 (2003); 964.0 (2004). - AGRICULTURE AND RURAL DEVELOPMENT: 1,676.5 (2003); 1,333.0 (2004). - GOVERNANCE, SECURITY AND THE JUDICIAL SYSTEM: 2,359.8 (2003); 2,912.7 (2004). - SECURITY AND PUBLIC ORDER: 1,323.2 (2003); 1,666.0 (2004). - GOVERNANCE: 558.8 (2003); 528.7 (2004). - JUDICIAL SYSTEM: 477.8 (2003); 718.0 (2004). - OTHER PRIORITY SECTORS: 1,280.5 (2003); 1,134.0 (2004). - SOCIAL ACTION: 266.8 (2003); 202.0 (2004). - LABOUR AND EMPLOYMENT: 108.4 (2003); 122.0 (2004). - MINERAL AND ENERGY RESOURCES: 905.4 (2003); 810.0 (2004). - Shares (as % of total expenditure excl. Interest on public debt): - EDUCATION: 18.5%; 20.7%. - PRIMARY AND SECONDARY EDUCATION: 15.3%; 17.6%. - HIGHER EDUCATION: 3.2%; 3.1%. - HEALTH: 13.4%; 10.9%. - HIV/AIDS: 0.2%; 0.5%. - INFRASTRUCTURE: 11.3%; 13.7%. - ROADS: 7.4%; 10.5%. - WATER AND PUBLIC WORKS: 3.9%; 3.2%. - AGRICULTURE AND RURAL DEVELOPMENT: 6.4%; 4.4%. - GOVERNANCE, SECURITY AND THE JUDICIAL SYSTEM: 9.1%; 9.5%. - SECURITY AND PUBLIC ORDER: 5.1%; 5.5%. - GOVERNANCE: 2.1%; 1.7%. - JUDICIAL SYSTEM: 1.8%; 2.3%. - OTHER PRIORITY SECTORS: 4.9%; 3.7%. - SOCIAL ACTION: 1.0%; 0.7%. - LABOUR AND EMPLOYMENT: 0.4%; 0.4%. - MINERAL AND ENERGY RESOURCES: 3.5%; 2.7%. - Nominal increase in priority-area expenditure: from 16,622 billion Meticais in 2003 to 19,362 billion Meticais in 2004, a nominal increase of 16.5%. ### Fiscal and budgetary policy actions implemented in 2004 (selected) - Conclusion of the preparation of the General State Account 2003 and the revision of the State Financial Administration System Regulations. - Approval and publication of Ministerial Decree 1/2004 regarding the architecture of CUT installations, regulations governing movements (payments and deposits) of the Treasury bank account and documentation and daily operations in the banking system. - Start of entering e-SISTAFE data into the computer system (regarding State Budget execution for 2004). - Conclusion of the study into Programme-Based Budgeting to support MPF and Sectoral Ministries for implementation. - Conclusion of preparatory work for creating the Tax Administration and submission of the respective Statute for approval. - Restructuring central and local organs of the Tax Administration due to alterations in the taxation system. - Updating the Business Social Capital Register. - Conclusion of the proposal for reorganising the management of Lotteries, Totobola, Joker and other betting associations and the proposal for the State to a grant concession to the Lottery and Betting Management Association. - Preparation of Management Accounts by the General Gambling Inspectorate for the 2003 financial year and submission to the Administrative Tribunal. - Preparations in progress of the bill for the simplified SISA Code to be submitted to the Council of Ministers in the third quarter of the year. - The bill for the General Taxation Law was prepared, approved by the Government and submitted to Parliament. - Initial versions of the Customs regulations for Coastal Trade and On-Board Consumption completed; study comparing national customs legislation with Kyoto Convention recommendations completed. - Proposals being prepared for the bill concerning the Legal Code for Customs Infractions, Legal Costs Regulations and the Customs Proceedings Code. ### Selected PARPA targets and indicators (2004 baseline and projections) - Education: - Net education rate EP1 (boys/girls): 72% 69%; 75.6 % 73.2 %; projections: 76% 74%; 80% 78%. - EP1 completion rate / Girls' EP1 completion rate: 43% 36%; Not presently available; projections: 48% 41%; 58% 52%. - Health: - Institutional deliveries: 47%; projection: 49 %; subsequent: 49% 51%. - Coverage <1 year DPT3 and Hepititis B 3-23 months: 95%; 96 %; projections: 95% 95%. - Utilisation rate: out-patient consultations per inhabitant: 0.91; 1.02; projections: 0.93 0.94. - Prevalence rate of HIV-AIDS, adults: 14.9%; 13.6% (2002 rate for adults (15 – 49 years)); projections: 15.6% 16.1%. - Number of pregnant women and newborns with HIV who received prophylaxis to prevent vertical transmission: 8000; 4000; projections: 15000 20000. - Number of people living with HIV/AIDS who take antiretrovirals: 4000; 8000; projections: 10000 29000. - Roads: - Kms. Rehabilitated / Periodic Maintenance / Routine Maintenance: 813 1,392 13578; 819 km 514 9653; projections: 1160 2062 14343; 705 2001 15247. - Water and sanitation: - % Population with access to drinkable water: 41%; 41%; projections: 43.4% 45.8%. - % Population with access to sanitation services: 35%; 35%; projections: 37% 39%. - Agriculture and rural development: - % agrarian activity assisted by extension services and/or livestock activity during previous 12 months: 20%; (For years without TIA, see table below); projections: 21% 22%. - Micro-credit clients: 80000; 60000; projections: 90000 100000. - % of cereal production sold (proxy): 54.5%; projections: 57% 59.5%. - Nº of applications processed within a limit of 90 days (land access): 2500; 2117; projections: 3000 3200. - % of small and medium projects using irrigation techniques: 11.5%; (For years without TIA, see table below); projections: 12% 12.5%. - % of concessions with approved operating plans: 22%; 34 %; projections: 30% 40%. ### Additional 2004 agrarian / veterinary results (TIA and proxy indicators) - Total Subsistence farmers assisted by public extension services (incl. Outsourcing): 164,400; 150,000; projections: 196,600 201,600. - Chickens vaccinated against Newcastle Disease: 2,500,000; 4,926,815; projections: 3,000,000 3,500,000. - Cattle vaccinated against Foot and Mouth: 400,000; 326,355; proxy: 165,832 200,000. - Cattle vaccinated against Anthax: 800,000; 286,172; proxy: 659,782 1,000,000. - Cattle vaccinated against Blackleg: 300,000; 122,184; proxy: 249,965 400,000. - Areas identified for rehabilitating or constructing irrigation systems: 5,750; 5,683; projections: 6,850 8,200. - Work executed (in years without TIA): 1,600; 791; projections: 2,900 3,200. - Note: "# Information referring to 4 and 5 (January to May) months, adjusted to a year." ### Institutional and legal reforms (selected progress) - Implementation evaluation and start of CRESCER and ADE national programmes for low-cost schools: MINED launched and implemented the 2nd and 3rd phase of the ADE programme; 8100 EP1 schools received between 3,5 and 90 million meticais in the 2nd phase and 8400 EP1 schools received between 4.2 and 70 million meticais in the 3rd phase. - Strategic Plan 2004/08: approval process and implementation progress noted; draft document presented to and approved by co-operation partners. - Revision of the Labour Law: Terms of Reference completed; three regional seminars held; submission of revised law planned. - Submission of the revised Business Code to Parliament. - Approval of Commercial Licencing Regulations by the Council of Ministers (revocation of Decree no. 43/98); dissemination pending. - Approval of Regulations for inspecting commercial and industrial activities. *Source: _cr05310 - Section 544 of the American Law concering external financing and other* ### Conclusion of the revision process for legislation on industrial and commercial inspections. Revised legislation dissemi ### Conclusion of the revision process for legislation on industrial and commercial inspections. Revised legislation disseminated to the business community and industrial and commercial activities inspected. ### Institutional and regulatory reforms (inspections, procurement, auditing) - Conclusion of the revision process for legislation on industrial and commercial inspections; revised legislation disseminated to the business community and industrial and commercial activities inspected. - Procurement: Approve legislation based on recognised international principles concerning the procurement/contracting process for public works, goods and services. Status: √. - Auditing: Revision of functions of internal and external auditing institutions; Law being prepared and begin implementation. - Integration between PES, PARPA and CFMP: Included in PES and OE methodology 2005. - Adapt the PES Evaluation to be the principal Monitoring Instrument for PARPA: PES Evaluation for 1st Semester approved by Council of Ministers and submitted to Parliament. ### Financial sector reforms and state shareholdings - Forensic audit of Banco Austral through the Attorney General: Begun; work put out to tender but no companies in Mozambique responded, nor LEBOUF in South Africa. Further attempts made to encourage LEBOUF and PriceWaterhouse in South Africa to bid. Status indicated: Completed. - Strengthening supervision capacity of the Bank of Mozambique: Implement IAS in the financial sector (including alternations in the taxation system). IAS Strategy presented; Terms of Reference and financial arrangements formulated for the diagnostic study for examining BIM, Bau, BSTM and BCI/BF for formulating transition plans to IAS. Status: Implemented. - Revision of financial institutions framework: - LFL submitted to Parliament, LICSF Regulations Prepared. Draft regulations completed; approval awaited before dispatch to the Council of Ministers. Regulations of the New Financial Institution Law approved in July 2004, revision of the regulations of the Micro-finance Law completed (Revised Law nº 15/99). LFL will only be approved by Parliament in 2005 and subsequently sent to the Council of Ministers. Status: LFL regulations prepared; Implemented. - State withdrawal from position as shareholder in the banking sector: - Withdrawn from position as shareholder in Bau; strategy defined for withdrawing State shareholding in BIM and for public companies to hold shares in the banking sector. - Study to be concluded in June 2005. - Two strategies implemented (planned). ### Tax reform and public financial management - Tax Authority creation: - Submit proposed law to Parliament. The legal bill to establish a Tax Authority was approved by the Council of Ministers on 1st April 2004 by decree 5/2004 and published in BM 13 and submitted to Parliament on 7th August 2004. - Targets: Approval of Regulations and Procedures; Establishment of Tax Authority (timing: Create Tax Authority in 2006). - PARPA priority sector expenditure target: - Expenditure in PARPA priority sectors should be at least 65% of total expenditure, excluding debt interest payment. At least half of this 65% should be spent in the Education and Health Sectors. Indicator: 65%. - Reported: 63,7% of which Health and Education receive 34% of a total of 53,5% planned for priority sectors. - Programme-based budgeting: - Implement programme-based budgeting, starting with 5 sectors including Education and Health. Work in progress to establish methodology for State Budget 2006 preparatory cycle. Introduction in preparatory cycle for State Budget 2006; 5 sectors covered in State Budget preparatory cycle 2007. - e-Sistafe implementation and SISTAFE coverage: - Implement e-Sistafe. DPPFs + MPF, MINED as pilot projects. Status: Completed. - Target: 60% of State Budget in SISTAFE; medium-term target: 100% State Budget. - Fiscal performance indicators (selected): - Total revenue as a percentage of GDP: 14.7 % (2004 reported). - Planned revenue: 17.810 billion Meticais; executed 16.466 billion Meticais: execution rate of 92,5%. - Targets/forecast: 15% (2005), 15.3% (2006). - Tax revenue (percent of GDP): 12.0 (2003), 11.3 (2004), 11.8, 12.5, 12.9, 13.4 (series). - Non tax revenue (percent of GDP): 1.0 (2003), 0.9 (2004), 1.4, 1.5, 1.6, 1.7 (series). - Total expenditure and net lending (incl. residual) (percent of GDP): 26.5 (2003), 23.7 (2004), 25.6, 24.2, 24.5, 24.8 (series). - Overall balance, before grants (percent of GDP): -14.0 (2003), -11.7 (2004), -12.4, -10.2, -10.0, -9.7 (series). - Overall balance, after grants (percent of GDP): -4.5 (2003), -4.4 (2004), -6.0, -4.4, -4.4, -4.2 (series). - Total grants (percent of GDP): 9.5 (2003), 7.3 (2004), 6.4, 5.8, 5.6, 5.5 (series). - Central bank transfer of HIPC assist. By the IMF (percent of GDP): 0.2, 0.4, 0.2, 0.2, 0.1, 0.0 (series). - Net external borrowing (percent of GDP): 4.2, 2.8, 4.7, 4.2, 4.2, 4.1 (series). - Net domestic financing (percent of GDP): 0.1, -0.5, 1.1, 0.0, 0.0, 0.0 (series). - Domestic primary balance (percent of GDP, memorandum): -3.7, -3.7, -2.8, -1.6, -1.7, -1.5. ### Governance, justice, and anti-corruption - Anti-corruption institutional strengthening: - Survey conducted into Good Governance, corruption and service provision and implement the anti-corruption strategy. Survey conducted. UTRESP already in progress. Began 27th November 2003. Strategy approved. - Survey into corruption in the judicial system completed and results published. Study assessed. Monitoring of Study in progress. Action plan approved and implementation begun. - Increase Government resources (particularly for improving the contracting of personnel) for the Anti-Corruption Units. Status: √. Budget for 2005 is guaranteed: √. - Reinforcement of the Inspection System: Reforçado o Sistema de Inspecção √. - Judicial reform and legal code revisions: - Increase the number of judicial sentences; sector goal: attain an accumulated result of 60% in 5 years. Indicator: Increase % (to be submitted to the judicial authorities) 20%. Reported increase in 2003 between 30 and 35%. Targets shown: 20% (2004), 20% (2005), 20% (2006). - Reduction in the number of prisoners awaiting charges and judgement: Indicator % maximum prisoners awaiting judgement: 65% (baseline), Data not presently available (2004), 57% (2005), 50% (2006). - Presentation of a long term programme of reform including a planning, budgeting and monitoring system giving priority to sector service provision: Submission to the Council of Ministers: √. - Revision and submission to Parliament of multiple codes: - Civil Proceedings Code: Bills prepared and dispatched to CIREL. Status: √. - Civil Registry Code: Reformed Civil Registry Code submitted to Parliament: √. - Judicial Organisation Law including legal base for introducing commercial articles: Terms of reference prepared; awaiting discussion at provincial level: √. - Penal Code: Proposal for revised Penal Code submitted to CIREL and to Parliament - to be discussed this year: √. - Notary Code: Preliminary Notary Code report concluded and submitted to CIREL. Awaiting harmonisation with Business and Civil Code: √. - Penal Code and Prison Legislation: Preliminary Penal Code report concluded and submitted to CIREL. Reform of the Organisational prison law in initial stages: √. ### Macroeconomic performance and medium-term framework (selected historical and projected indicators) - National accounts and prices: - Nominal GDP (in billions of meticais): 113,810.7; 137,424.8; 159,912.0; 184,289.0; 208,813.0; 235,193.0 (series 2003–2008). - Nominal GDP (in billions of U.S. Dollars): 4.8; 6.1; 8.2; 9.2; 10.0; 10.9 (series). - Real GDP growth (%): 7.8; 7.2; 7.7; 7.4; 6.4; 6.4 (series). - GDP per capita (in U.S. Dollars): 258; 320; 424; 460; 491; 522 (series). - Consumer price index (annual average): 13.4; 12.6; 8.0; 7.3; 6.5; 5.9 (series). - Consumer price index (end of period): 13.8; 9.1; 8.0; 7.0; 6.0; 5.8 (series). - External sector: - Merchandise exports (percent of GDP presumably or index as presented): 28.9; 44.1; 13.9; 1.9; 1.8; 6.3 (series as presented). - Merchandise imports: 12.8; 16.9; 15.6; 2.8; 10.0; 2.9 (series as presented). - Terms of trade: -1.4; 13.4; 2.2; -7.3; -8.9; -2.8 (series). - Nominal effective exchange rate (end of period) 1/ : -10.9; 17.9 (two-point series shown). - Real effective exchange rate (end of period) 1/ : -2.7; 24.8 (two-point series shown). - External current account, after grants (percent of GDP): 9.2; 5.8; 7.1; 6.8; 9.2; 7.5 (series). - Debt and reserves: - Net present value of total public external debt outstanding 2/ : 102.0; 83.8; 83.6; 89.5; 96.0; 99.3 (series). - External debt service (nonfinancial public sector) scheduled, after original HIPC Initiative assistance: 9.3; 6.1; 6.0; 6.1; 6.2; 6.2. - Scheduled, after enhanced HIPC Initiative assistance: 7.0; 4.3; 4.3; 4.6; 4.7; 4.7. - Scheduled, after additional bilateral assistance: 6.1; 4.5; 5.1; 5.3; 5.4; 5.2. - Overall balance of payments (in millions of U.S. dollars unless otherwise specified): 122; 212; -84; -305; 9.0; 97. - Net international reserves (end of period): 738; 960; 900; 902; 994; 1,123. - Gross international reserves (end of period): 947; 1,159; 1,076; 1,045.0; 1,104; 1,201. - Reserves in months of imports of goods and nonfactor services: 5.4; 5.8; 4.7; 4.4; 4.1; 4.3. *Source: ECONOMIC AND SOCIAL PLAN EVALUATION 2004 (as presented in the provided content).* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2005/_cr05310.pdf_