May 9, 2003

IMF review on poverty reduction strategy

A lack of capacity and resources at provincial and local level have hampered the achievement of goals outlined in Mozambique's Poverty Reduction Strategy Paper (PRSP), the International Monetary Fund (IMF) said in its latest progress report.

PRSPs are prepared by countries, in broad consultation with stakeholders and development partners, including the World Bank and the IMF. The PRSPs are meant to map out the country's macro-economic, structural and social policies in support of growth and poverty reduction.

The annual progress report, which is now available on the internet by agreement between the IMF and Mozambique, notes that "in general the government has succeeded in allocating resources increasingly on the basis of [PRSP] objectives and poverty reduction targets". However, it notes that "the scarcity of resources, both financial and human (qualified technical personnel in all regions of the country), has made it more difficult to achieve those objectives". Consequently, there were "low levels of budgetary execution, mainly at the provincial level".

"This highlights the need for government to press ahead with efforts to decentralise competencies and finance; to ensure actions aimed at national development are reflected at provincial and local level alike; and, more specifically, to reduce regional imbalances," the IMF said. Municipalities have been unable to gain increasing budgetary autonomy, as they have failed to generate revenue internally and central government still needs to co-finance municipal budgets. "In the case of the municipios [municipalities], the [central] government must clearly continue channelling resources into the education and health sectors. New infrastructure projects are also needed, especially with a view to improving basic sanitation conditions, potable water supply, environmental conservation and road maintenance," the IMF added.

As a result of the inability of municipalities to generate revenue, "social installations and basic infrastructure steadily deteriorate, seriously undermining the activities and living standards of municipal inhabitants". Studies needed to be conducted to find ways of raising the fiscal capacity of municipalities. (IRIN)

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