IMF wants Mozambique to clarify fiscal decentralization strategy

9 August 2006

Washington, USA, 09 Aug – The International Monetary Fund (IMF) wants Mozambique to clarify and control its ongoing fiscal decentralization strategy to improve the use of financial resources, indicates an IMF statement released Tuesday.

Summing up the recent visit to Mozambique by the director of the Fund’s African Department, Abdoulaye Bio-Tchané, the IMF indicated that effective decentralization of the internal revenue service is needed to “create sufficient fiscal stimulation for priority investments.”

The process of transfering fiscal powers to the provinces “has to be clarified, well sequenced and include control and monitoring mechanisms which guarantee that resources are well spent.”

The Fund also urges the Mozambican authorities to redouble efforts to “mobilize resources, strengthen the public sector reform program to improve the provision of state services, and ensure efficient use of the increased aid from donors.”

The main mid-term challenge is to “maintain widespread economic growth” and to implement the national poverty reduction strategy (PARPA).

“This will require continued stabilization efforts, lower business costs and attention to governance issues, including new improvements of the systems to manage public spending and transparent management of natural resources,” the statement adds.

The IMF urges the authorities to remain “alert” to volatile oil prices on international markets and to possible adverse weather conditions.

The statement nevertheless asserts that Mozambique “maintained a strong macroeconomic performance in 2005 and early 2006, and the macroeconomic forecast is favorable.” (macauhub)