Mozambique - Poverty Reduction Strategy Paper (PRSP) progress report and joint staff advisory note

ReportNo. MZ-32620 Documentof The WorldBank FOROFFICIAL USE ONLY THE REPUBLIC OF MOZAMBIQUE Joint Staff Advisory Note of The PovertyReductionStrategyPaper June 10,2005 Preparedby the Staff of the InternationalDevelopmentAssociation And the InternationalMonetaryFund This documente has a restricted distribution and may be usedby recipientsonly in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank Authorization  FOROFFICIAL USEONLY THE INTERNATIONALDEVELOPMENT ASSOCIATION AND THE INTERNATIONALMONETARYFUND REPUBLIC OF MOZAMBIQUE PovertyReductionStrategyPaper-Progress Report Joint StaffAdvisoryNote Approved by Gobind Nankani (IDA) and DavidNellor and Anthony Boote (IMF) June 10,2005 I.INTRODUCTION 1. The government has been implementingits Action Plan for ReducingAbsolute Poverty(Portuguese acronymPARPA; the MozambicanPoverty ReductionStrategy Paper) for 2001-05 for four years. Inthe last Joint StaffAssessment (JSA), the staffs o fthe World Bank and the IMF concluded that the implementationo f the PARPAcontinued to be sound because it appeared to have bome fruit inthe form o f a sharply reduced poverty rate, The staffs also pointed out that, among other things, (i) the reform effort should be intensified inareasthat are crucial for private sector development, includingthe cost ofdoing business, basic infrastructure, and thejudicial system; (ii) there was a needto strengthen further the financial sector and improve the lending environment, including by facilitating the use o f land as bank collateral and establishing an appropriate framework for microfinance activities; (iii) datareportingsystemshouldbestrengthened; and(iv)improvementswereneededto the strengthen the PARPA process and the preparation o f subsequent planning and progress reports. 2. This Joint StaffAdvisory Note(JSAN) providesadvice on the PARPA implementationin 2004 and its main goals for 2005. It draws mainlyon the government's Annual Progress Report (APR,or BdPES inPortuguese) on PARPA implementationfor 2004, and the 2005 Economic and Social Plan (PES, the country's annual program).' The Mozambique planningand monitoring system consists o f the PARPA (outlining the five-year Other background documents include the following govemment documents submitted to the national assembly: the budget execution report for 2004, the medium-term fiscal scenario (CFMP), and the state budget (OE). The government and the direct budget support donors annually review the past year's implementationinApril/May and agree on new commitments inSeptember. These reviews leadto an aide-mCmoire that complement the APR andthe PES. The most recent aide-memoire (May 2005) was used as backgroundfor this JSAN. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. I t s contents may not be otherwise disclosed without World Bank authorization. II  - 2 - poverty reduction strategy), the PES (detailing the action program to implement the PARPA in a particular year), and the APR (assessingimplementationo fthe PES and the PARPA inthat year). The 2004 APR evaluates Mozambique's performance relative to benchmarks set by the 2004 PES, while the 2005 PES defines the country's program for 2005. Bothreports are submittedto the nationalassembly. The 2004 APR is animprovement over the 2003 APR in that it better reflects the PARPA and PES implementation and responds to issues raised in previous JSAs. It could benefit, however, from more analysis (especially o f the weak performance insome areas) and a closer linking to the central, sector, and provincial monitoring systems. The APR inMozambique does not provide an overview of the coming year's policy intentions, which i s set by the PES. 3. The governmentis preparinga new PARPAfor 2006-10. It is expected to be finalized duringthe first halfo f 2006 and will examine the relationship between annual management instruments and the APR and suggest changes inthe development o f the monitoring and evaluation systems. With the first PARPA expiring at the end of 2005, the staffs have recommended that the government prepare a full implementationreport. The government fndicated that it would include this assessment inthe framework for the next PARPA. 4. The staffs agree with the APR view that a numberof the MillenniumDevelopment Goals(MDGs) are within Mozambique's reachbutthat, to achieveothers,Mozambique will requirethe help of the internationalcommunityto make hrtherprogress and attract more investment. Inparticular, Mozambique i s likely to reach the poverty MDG (namely, to halve poverty by 2015) and the infantmortality goal (to halve the under-5 infant mortality rate by 2015). However, it is unlikelyto meet the goal o funiversal primary school completion by 2015 or the goal o f gender equality in education (completion rates, rather than enrollment rates). Overall, muchpolicy reform, effort, and additional donor support-aimed partly at relieving capacity limitations inthe country-will be required for Mozambique to meet the majority o f the MDGs. The PARPA for 2006-10 will assess the MDGs. 11. GROWTH POVERTY AND A. MacroeconomicPerformancein 2004 andMedium-TermFramework 5. The staffs notethat althoughthe economy continuedto performwell in 2004, the envisaged fiscal consolidationwas not achievedandthere were some delays in the implementationof structuralreforms.The APR shows that, based on the new official nominal GDP series for 2000-03,2 growth decelerated to an estimated 7.2 percent o f GDP in 2004, reflecting the completion o f a number of private sector megaprojects. Year-end inflation The new GDP series for 2000-03 were revisedupward by 10percent on average. The revision affects all ratios to GDP not only duringthat periodbut also for the medium-term projections.  - 3 - fell from almost 14 percent in2003 to 9.1 in2004. A decrease inthe share o fnonperforming loans enabled the banking systemto reduce its vulnerability. Strong growth intraditional exports, the completion o f megaprojects, and improved terms o f trade narrowedthe extemal deficit. The smaller deficit, together with greater-than-anticipated external aid andprivate capital inflows, helpedto boost net intemational reserves. As a result, the metical appreciated inrealeffective terms. Incontrast, fiscalperformancewas below expectations because o fa shortfall inrevenues. 6. The revisedmedium-termscenario(in the PES) envisages stronggrowthin 2005- 08 (in the rangeof 6-8 percent)together with a gradualdeclineininflationto 6 percent by 2008. The medium-term economic policies are intendedto spur export-ledprivate sector growth while enhancing fiscal and external viability through a buttressingo f tax administration coupled with more efficient expenditures. 7. The staffs think, by makinga concertedeffort andimplementingthe proposed actions on tax administration,the countrywill be able to achieveits medium-termfiscal objectives.The medium-termfiscal projections envisage a decline inthe government's domestic primary deficit from 3.7 percent o f GDP in2004 to 1.5 percent in2008 through a further strengtheningo f government revenue, improvements inpublic expenditure management, and better control over the wage bill. Inline with the PARPA, government revenue i s expected to increase from 12.3 percent o f GDP in2004 to 15.1 percent in2008. 8. The APR does not includea detaileddiscussionof debt-managementissues, a weakness that needsto be addressed. However, Mozambique's public debt is expected to remain sustainable over the medium term. Based on the revised macroeconomic framework, the net present value o f extemal debt to GDP will continue to decline gradually to about 20 percent by 2008. 9. The staffs believethat the prioritizationof expendituresfor the PARPApriority sectors shouldcontinueat the core of the new PARPA.APR estimates for 2004 indicate that spendingonpriority sectors reached 63.3 percent o f total expenditure excluding interest payments, or 92 percent o f the budget target. This represents a slight decrease compared with 2003 (63.4 per~ent).~Spending execution rates on education, health, infrastructure, and govemance was high(above 90 percent), except for spendingon HIV/AIDS (59 percent) which was low as a result o f persistent problems with financial mechanisms, untrained staff, and weak national coordination. Spending execution was also low on agriculture (62 percent), as a result o f delays indisbursements from donors. Whenthe costs o f elections and interest payments are excluded from total expenditure, the spendingonpriority sectors is 64.4 percent. This performance is acceptable considering the costs o f elections, the shortfall inrevenues, and the good performance o f domestically financed spending.  - 4 - 10. The staffs believethat budgetcomprehensiveness,through a single treasury account,is critical to enhancingpublic financial managementandit is not addressedin the APR. The staffs encourage the government to include it inthe forthcoming new PARPA. Many own revenues and donor flows remained either completely off the budget or were not executed throughthe treasury in2004. This tended to undermine the budget process because a large proportion o f the line ministries' resources is off-budget. It also ledto an under-reporting o f the execution o f externally financed investment expenditures and to inconsistencybetween budget execution reports and informationprovided separately by line ministries. 111. POVERTY 11. As mentioned inthe previous JSA, the governmentprepareda new povertyanalysis during2004 basedon recentinformation.The findings,which corroboratedthe earlier analysis,indicatedthat Mozambiquehadsignificantlyreducedpoverty.For example, the estimated proportion of the population livingbelow the poverty line fell to 54 percent in 2002/03 (thereby already achieving the PARPAtarget for 2005). Inaddition, the new analysis showed that all groups insociety, including the poorest, hadbenefited from economic growth and that inequality inreal consumption betweenprovinces and regions had diminished. The preparation o f the new PARPA, currently under way, is taking the 2004 analysis into account to design policy reform. 12. Preliminaryinformationshows stronglinksbetweenthe rapidgrowthexperienced by the country in recentyears andpovertyreduction.The composition o fgrowth in2004 continues to be broadly based and, according to the government's 2004 analysis, has contributed to a further reduction inthe poverty level; this conjecture, however, can be confirmed only by a new household survey. The APR does not produce this analysis but includes the sectoral composition o f total output. Sustaining high, broad-based growth inthe future will depend on a new generation o f reforms that the country needs to develop and implement; the PARPA revision should produce a strategy and a framework for such reforms. IV. PUBLICFINANCIAL MANAGEMENT 13. The staffs agree with the APR that the government'sperformancein managingits publicfinanceswas mixed.After the rollout o fthe new public financial management system (SISTAFE) was initiated inthe Ministry o f Finance (MF), it made critical progress, but the subsequent rollout process then suffered significant delays. Steps were taken to establish the central revenueauthority although Mozambique's revenue performance was poor in2004. Procurement reform has been delayed, although recent developments are promising. 14. The rolloutof the SISTAFEbeganon November1,2004 allowingthe government budgetto be executed electronicallythrough e-SISTAFE.The budget execution o fthe MinistryofFinanceand the Ministry ofEducation and Culture through e-SISTAFE were to have been initiated in2004 but are now scheduled for end-2005. The delay, not explained in the APR, was due to institutional weaknesses duringthe transition period leading to the  - 5 - installation o f the new government. The staffs see the SISTAFE as crucial for enhancing budgetexecution, transparency, and comprehensiveness (with the inclusion o foff-budget expenditures), and the country should focus on its implementation. 15. The tax reformprogressedas envisaged. A draft general tax law creatingthe Central Revenue Authority was submitted to the national assembly inearly August 2004, and the intemal regulations for the Domestic Tax General Directorate were approved inDecember 2004. Revenue collection, however, was lower than programmed partly as a result o f delays in implementing the computer system for the new income taxes, the effects o f the appreciation of the metical on customs revenues, and continuing administrative weakness. The government should make special efforts to improve revenue administration, raise revenue collection, and broaden the tax base. 16. Althougha new procurementregulationhas notyet been approvedas hadbeen anticipated, some progresshasbeen made anda finaldraftis expected to be approvedby the governmentin 2005. The delays were partly the result o f complications relatedto consultations with the different stakeholders. The staffs believe that the government's next critical steps shouldbe to implement the new regulation inthe context of the SISTAFE reform and to build capacity. v. PRIVATEAND FINANCIAL SECTORS 17. Mozambique'sperformanceinimplementingreforminthe privateand financial sectors was mixed,as determinedbythe APR, andthe staffs agree. The authorities made reasonable progress inimplementing structural reforms inthe financial sector but little progress indeeper reforms that would improve the functioning o f the banking system, such as legal andjudicial reform (discussed inSectionV), and the tradability of land-use titles. They made modest progress inimproving the business environment but are urged to step up their efforts to improve the environment for private sector development; the PARPA revision should address this issue. 18. The reformof the financialsector was good, althoughthe APR did notprovide much informationin this domain.Inparticular, the government approved a strategy for adopting International Financial Reporting Standards by 2007, preparedregulations related to the banking institutions law, and began to develop the strategy for its withdrawal from the Banco Intemacional de Moqambique BIM.It made little progress in submittinga bankruptcy law to the national assembly or inpreparing a strategy to regulate the participation o f state- owned enterprises inthe financial sector. Moreover, although the anti-money-laundering law was approved, the financial investigations unit was not established. The government, however, has committed itselfto developing an action plan and corresponding timetable by end-May 2005 so as to have the unit operational by December 2006. 19. N o progress was madein 2004 in modernizingthe titling system for urban or rural land-an importantconditionfor facilitatingthe channelingof resources throughthe financialsector to the privatesector.Although the government discussed aproposal for  - 6 - urban title reform, it didnot present the proposal for consideration by the Council o fMinisters. With donor support, the government is committed to do a poverty and social impact analysis of land titles. The staffs are o f the opinion that little progress was made inmoving forward with the project. 20. Progressin improvingthe business environmentwas mixed.The revision o fthe labor law was delayed to end-2005 by the PES-the staffs think that this reform may well slip into 2006 to ensure that revisions are properly designed and consultations are done; that o f the commercial code was also delayed but expected by end-June 2005; and new, simplified regulations for licensing commercial and industrial activities were put inplace, as were the regulations for inspections o f commercial and industrial activities. It i s important that the revision o f the labor law introduce more flexibility, particularly with respect to short-term hiringandrecruitment offoreign labor. VI. GOVERNANCE 21. The APR describedoverall progress in the area of governance(public, legal, and judiciary reforms and decentralization)as slow, and the staffs share that view. The targets for the public sector reformin2004 were partially met but had a limitedimpact on service delivery. Some progress was made on the anticorruption agenda: the anticorruption law was approved, and the National Survey on Governance and Corruption was completed. Little progress was registered inthe justice sector, including the administration o fjustice. The country made notable progress on decentralization (see paragraph 25). 22. The APR reportedmodest progress in publicsector reform.Only two o fthe six functional analyses (of the Ministries o f Agriculture and Industryand Commerce) were formally approved, presentation o f the remaining four has been rescheduled for 2005. Preparatorywork began on the civil service pay reform, but the staffs urge the government to do more to ensure that the reform will be consistent with overall fiscal targets. The staffs also think the reformo fthe public sector (including development o fcapacitybuilding)is a crucial part o f the requisite second generation o f reforms. 23. Althoughthe APR does notprovidemuchinformation,some progresswas made in combatingcorruption.The national surveyon corruption was completedinthe last quarter of 2004, with dissemination rescheduled for the second quarter o f 2005, and an anticorruption law was passed, although the regulations for this law have not yet been elaborated. Inaddition, an anticorruption unit, while not yet formalized, is operating. The staffs are o f the view that although the APR does not draw this conclusion, many alleged corruption cases have been reportedto the unit but that the number o f investigations and convictions completed so far i s extremely low. The government needs to develop an anticorruption action plan as part o f the judicial reform based on lessons from the survey. 24. The APR has a longsection onjustice, but the staffs are of the opinionthat Mozambiquemade littleprogressin reformingthe justice sector.The legislative reform and training programs are being implemented. An integrity study o fthejudiciary was  - 7 - completed, and fundingto the sector was increased. However, the long-term vision document, an essential part o f the reform program, was not completedas plannedand i s not expected soon. The backlog and the total volume o fjudicial cases continue to increase. The government's ongoing challenges are to enforce humanrights, provide access to justice combating corruption and economic crime, and contribute to a favorable business climate. The revision o fthe PARPA should include a stronger action plan for the reform o fthejustice administration. 25. The APR identified progress in decentralization-an assessmentshared by the staffs. For example, the introduction o fparticipative district planningmoved forward more than expected, but a number o f challenges remain. The APR does not emphasize as strongly as the staffs do that budgetallocation, execution, and accountability mechanisms at subnational levels need to be strengthenedand that off-budget expenditure and revenue should be systematically recorded. VII. SERVICE DELIVERY 26. Overall, service delivery in 2004 improved, as reported inthe APR. The staffs find that the APR describes adequately service delivery; it also includes a good amount o f statistical informationand shows functioning monitoring systems.However, these systems need to be better coordinated with the central system. 27. Mozambique made good progress in the education sector, particularly in primary education. For example, compulsory fees for primary schools were abolished, making education available to a larger number o f students. The new curriculums for basic education, literacy, and nonformal education were implemented. At the secondary level, the curriculum was revised at the post-secondary level, and important improvements were also achieved. Nevertheless, challenges remain: (i) finalizing the second four-year strategic plan for the education sector, (ii) improving financial management, and (iii) strengthening teacher training. The APR does not identify teacher recruitment as an issue, but the staffs are o fthe view that the sector needs to improve the link betweenteacher training andbudget ceilings; this issue should be address during the PARPA revision. 28. Progress was made in the health sector in 2004, with an expansion of basic and essential obstetric services leading to an improvement of the MDGs indicators-namely, the reductionof the infant and under-5 mortality rates. Problems arose inthe management of the vaccination program, particularly inlogistics and the poor performance o fthe outreach teams. The APR does not, but should, stress the need to prioritize actions inthe health sector to improve efficiency. 29. Progress in combating HIV/AIDS was mixed in 2004. Onthe one hand, mother-to- child transmission declined, antiretroviral treatment increased more than hadbeen expected, and a single national strategic planwith one coordinating mechanism and one national monitoring and evaluation system was established. Onthe other hand, access to care and treatment needs to be scaled up. Political leadership at all levels and across all sectors was not  - 8 - strong and few sectors have mainstreamed HIV/AIDSintheir sector strategies, with still fewer dedicating resources to the problem. Finally, civil society engagement at all stages o f strategy development and implementationhas not been adequate, and government coordination o f HIV/AIDS programs needs to be improved for its programs to become more effective as infection rates increase. VIII. MONITORING, EVALUATION, DISSEMINATION THE PARPA AND OF 30. Monitoringofthe PARPAhas improvedalongthe linessuggested in the previous JSA, but there is stillroomfor significantprogress.Onthe positive side, (i) the 2004 PES and the annual budget (OE inPortuguese) are better integrated inthe PARPA implementation process than inprevious years; (ii) the macro-fiscal scenario for the medium term (CFMP in Portuguese) was sent to the national assembly for the first time in 2004, and (iii) the governmenthas made progress informulating its 2005 budget inthe context o fthe CFMP. However, the government still needs to (i) integrate more tightly the PES, the OE, and the CFMP into a single process; (ii) linkmore closely the discussion inthe APR withthe PES so that the APR reports specifically on outturns relative to benchmarks established inthe PES and provides more information on the main policy developments and issues; (iii)harmonize more hllythe sectoral andprovincial monitoring systems with the APR preparation; (iv) include all off-budget operations inthe budget, which will allow, among other things, for the presentation o fmore disaggregated expenditure data andmore complete information on donor-financed spending inbudget execution reports; (v) ensure that the APR that is sent to the national assembly is the final version o f the document rather than one in a series of revised drafts; and (vi) ensure that the separation o fthe planning and finance functions into two separate ministries will not create problems for the implementation and monitoring o f the PARPA and the relationship between the PES and the OE. 31. Significantefforts havebeen madeto broadenthe consultationprocess andthe disseminationof informationabout PARPA implementationto developmentpartners andthe publicin general,as emphasized inthe last JSA. The APR does not go into this but lists many steps that were taken: (i) Second Poverty Observatory was held inApril 2004 the and included representatives fiom the private sector, civil society, and a broad spectrum o f public entities; (ii) representatives from civil society participated inthe sectoral meetings to assess the implementation o f the PARPA in2004 inthe context o f the joint review process; (iii)representatives o f civil society will also participate inthe preparation o f PARPA 11; (iv) the government has consultedwith the private sector about procurement reform; and (v) the government has consultedwith the private sector and unions on the revision o fthe labor law. Ix. SUMMARY AND RECOMMENDATIONS 32. The APR broadly reflectsMozambique's progressin implementingthe PARPAin 2004 and lays out the government'sagendafor improvingperformanceand monitoring progress.The staffs believe that the government's poverty reduction strategy is still appropriate; it has been effective inreducing absolute poverty, and the improvements appear to  - 9 - have been well distributed across regions and segments o f society. Significant improvements have beenmade inhow the government's consults with stakeholders and inintegratingthe PARPA into the govemment's annual planning and monitoring instruments.Moreover, high, broad-based economic growth and macroeconomic stability have beenmaintained, although fiscal efforts fell short o f expectations. Good progress i s beingmade inachieving the PARPA targets; the improvements have been particularly noteworthy inthe provision o f services (education and healthcare). 33. The staffs' concern, however, is that progress has been limitedinthe implementation of many of the fundamental reforms that will lay the groundwork for a continued and sustained reduction inpoverty and high growth rates. Moreover, the reform effort will need to be intensified inareas that are crucial for private sector and rural development to allow for increasedproductivity and to improve the conditions for export-led growth. Many key areas where the pace o freform needs to accelerate are the same ones that were highlighted inthe last JSA, indicating that the deeper and more wide-ranging reforms are yet to be tackled inan intensive manner. They include reducing further the cost o f doing business, making the labor market more flexible, improving basic infrastructure, implementing public sector reform, and modemizing thejudicial system. The revision o f the PARPA that will take place in2005 i s a good opportunity to address all these issues comprehensively. In addition, the PARPA should also include the recommendations o fthe 2004 Diagnostic Trade Integration Study (DTIS) 34. Inaddition to improving the transparency of budget execution, the implementation of the SISTAFE, together with the inclusion of off-budget operations, will help to improve the data-reporting system, as highlightedinthe last JSA. Inparticular, budget execution reports still need to be strengthened so that they provide a more detailed functional classification o f expenditures and fully reflect donor-funded expenditures so as to facilitate monitoring o f priority expenditures. 35. While decentralization has moved forward, much more still needs to be done to strengthen administrative and financial capacity at the local level, as described by the last JSA. 36. The government needs to move quickly to clarify, codify, and implementthe organizational changes announced inJanuary 2005. Inparticular, there needs to be clarity on all levels about the division o f labor between the new Ministries o fFinance, Planning, and Agriculture. A prolonged lack o f clarity about the operational responsibilities o f these ministries could slow down planning and execution inthe relevant areas o f the PARPA. 37. Finally, it is important that an overall assessment of the implementation of the PARPA be prepared inthe context of the next PARPA.The staffs think that it should be the government's decision whether this i s a separate document or a section o f the new PARPA.   (Translated from Portuguese) REPUBLIC OF MOZAMBIQUE REVIEW OF THE ECONOMICAND SOCIAL PLAN OF 2004 7 JUNE 2005   - 2 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 CONTENTS I. INTRODUCTORY NOTE .............................................................................. 3 II. INTERNATIONAL OVERVIEW ..................................................................... Ill. NATIONAL SOCIAL AND DEMOGRAPHIC OVERVIEW/REVIEW...........47 111.1. MILLENNIUM DEVELOPMENT GOALS (MDGs)......................................... 7 IV.IV.l.NATIONAL 10 GLOBAL AND SECTORAL PRODUCTION ........................................... MACROECONOMIC OVERVIEW......................................... 11 A. AGRICULTURE, LIVESTOCK AND FORESTRY ................................ 12 B. 17 C. THE MINING INDUSTRY..................................................................... FISHERIES .......................................................................................... 19 D. MANUFACTURING INDUSTRY .......................................................... 20 E. ELECTRICITY AND WATER ............................................................... 21 22 G. BUSINESS ........................................................................................... F. CONSTRUCTION ................................................................................ 22 H. RESTAURANTS AND HOTELS........................................................... 23 I. TRANSPORT AND COMMUNICATIONS ............................................ 23 IV.2. MONETARY AND FOREIGN EXCHANGE SECTOR ............................ IV.3. INFLATION............................................................................................. 24 29 IV.4. BALANCE OF PAYMENTS .................................................................... 32 V.V.lPRINCIPALAREA DEVELOPMENTS BY SECTOR ............................................. 34 . SOCIAL ......................................................................................... 34 A. EDUCATION........................................................................................ 34 B. SCIENCE AND TECHNOLOGY........................................................... 42 C. 42 E. WOMEN AND SOCIAL ACTION .......................................................... HEALTH............................................................................................... 49 G. CULTURE ............................................................................................ 54 F. WAR VETERANS ................................................................................ 53 H. YOUTH AND SPORTS ........................................................................ 56 57 V.2 ECONOMIC AREA ................................................................................... I. ENVIRONMENT................................................................................... A. AGRICULTURE ................................................................................... 59 59 63 C. FISHERIES ........................................................................................... B. INFRASTRUCTURE ............................................................................ 68 D. MINERAL RESOURCES...................................................................... 69 E. G. TRANSPORT AND COMMUNICATIONS ............................................ F. MANUFACTURING INDUSTRY .......................................................... 71 TOURISM............................................................................................. 72 73 V.3. GOOD GOVERNANCE. LEGALITY. JUSTICE AND V.4. EXTERNAL RELATIONS AND DEFENCE.............................................. DECENTRALISATION .................................................................................... 77 82 VI. BUDGETARY POLICY.................................................................................. 89 ANNEX 1- SIMPLIFIED MATRIX OF PRINCIPAL INDICATORS..................... 95   - 3 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 1. INTRODUCTORYNOTE This evaluation was conducted during the final year of the Government's Five- Year Programme, 2000-2004. As recommended in the 2004 Economic and Social Plan document, this evaluation has been structured differently from previous evaluation reports in order to: (i) improve the consistency and coherence of the various planning instruments, and; (ii) monitor and evaluate the implementation of PARPA, an important instrument in the Government's strategy to reduce absolute poverty. The present document is divided into five main chapters: International Overview, National Social and Demographic Overview, National Macroeconomic Overview, Principal Developments by Sector and Budget Execution. This was a year in which public sector reforms were continued and consolidated. There was notable growth in social and economic infrastructure. There are signs that the Mozambican economy is continuing to grow at the planned rate, inflation is under control and the Metical appreciated strongly. The Government was able to honour its budget execution commitments, channelling more resources into sectors prioritised in the PARPA and keeping budget execution rates within the limits set in the budgetary legislation.  - 4 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 II. INTERNATIONAL OVERVIEW With an estimated 5% growth rate (compared with 3.9% in 2003) the world economy expanded significantly in 2004. According to the International Monetary Fund (IMF) this rate is one of the highest that has been registered in the last 30 years. Growth is largely a result of the performance of the North American and Asian economies, particularly those of Japan and China. Latin America also showed signs of recovery while African economies performed relatively well. However, increases in the price of oil caused economic growth rates to slow from the third quarter of 2004, particularly in the USA, Japan and China. In mid-August a barrel of oil cost 44.7 USD while at the end of the year the price fluctuated between 45 and 50 USD per barrel. In the coming months, the greatest risks will continue to be linked to the behaviour of oil prices (even though inflation is relatively low and stable) and the pressure that the price of oil will exert on interest rates. Interest rates tended to rise in the second half of 2004, following the movements of the United States Reserve Bank. The fiscal deficits of advanced economies continued to be a problem in 2004. These economies as a whole presented a fiscal deficit of 3.4% of Gross Domestic Product in 2004. The United States of America The GDP of the USA is estimated to have grown at a rate of 4.4% in 2004, compared with 3% the previous year. During 2004, the Federal Reserve Bank increased interest rates (federal funds) five times in the second half of the year to 2.25% as a method of controlling inflation in the face of strong economic growth. In 2004, private consumption and investment, whether by residents or non- residents, was relatively strong, considering that interest rates were relatively low throughout the year. The external sector was strong, particularly in the area of imports. Industrial production, at 4.4%, was higher than the previous year. The unemployment level in December was 5.4% (compared with 5.7% in 2003). The Dollar depreciated throughout the year in relation to the most important currencies, particularly the Euro. The principal problem facing the North American economy continues to be the double deficit: fiscal and external. These debts, accompanied by changes in the price of energy, could affect the available income of families. This in turn could lead to almost non-existant levels of savings that would have implications on future consumption and the behaviour of the dollar in coming months.  - 5 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 Japan Growth was estimated to be relatively high in Japan at 4% compared with 2.5% in 2003. This rate is the result of the continuation of high export rates (14%), a moderate recovery in investment and an increase in private consumption (3.4%). Industrial production grew by 1.8% compared to the same period in 2003 (December). The unemployment rate stood at 4.4% in December 2004 compared with 4.9% in December 2003. European Union In the European Union (countries using the Euro), there was an estimated growth in GDP in 2004 of 1.8% (0.6% in 2003). A recovery is still being hampered by many factors including higher oil prices and the appreciation of the Euro. The components of expenditure with the greatest contribution to economic growth were Gross Formation of Fixed Capital or GFFC (2.4%) and private consumption (1.2%). Industrial Production grew by only 1% and the unemployment rate continues to be relatively high at 8.9% in December 2004, unchanged from December 2003. China According to information from the Chinese National Statistics Bureau, the economy grew by 9.5% in 2004 compared with 9.3% the previous year. China's economy continues to expand rapidly, particularly in the agricultural and service sectors. GFFC has also made an important contribution to economic growth (25.8% of growth compared with the previous year) and retail sales grew by 14.% throughout the year. Inflation is relatively low, having been around 4% in 2004 compared with 1.2% in 2003. Emerging Economies Taking developing countries as a whole, GDP grew by approximately 6.6% in 2004, compared with 6.1% in 2003. Growth was supported by international trade which increased by about 9% in 2004, and by exports (approximately 11Oh). There were positive results in emerging economies particularly in Brazil, North Korea, Russia, Argentina, Chile, Mexico and India with growth rates of between - - 4 and 7%. Prices to the consumer stabilised in these economies while inflation rates in Venezuela, Egypt and Russia were between 10 and 20%.  - 6 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 Africa Taking African economies as a whole, growth in GDP was estimated at 4.5% for 2004 (4.3% in 2003). The average inflation rate was 8.4% compared with 10.3% the previous year. Zimbabwe's estimated growth rate for 2004 was - 5.2% compared with - 9.3% the previous year. Inflation in was approximately 350% in 2004 compared with 431.7% in 2003. In the other SADC economies, excluding Mozambique, South Africa and Zimbabwe, growth stood at 4.2% in 2004 compared with 3.4% in 2003. Angola, Botswana, the Democratic Republic of Congo, Mauritius and Tanzania exhibited growth rates higher than the average mentioned above. The Seychelles and Swaziland continue to present the lowest growth rates. The inflation rate for SADC economies was between 7 and 9% between 2003 and 2004 (excluding Angola and Zimbabwe whose interest rates are far higher than the regional average). South Africa According to Statistics South African, GDP growth in South Africa in 2004 is estimated at 2.6% compared with 2.8% in 2003. Growth in 2004 depended mainly on the financial and business services sector, the manufacturing sector and transport and communications. Compared with 2003, growth in the agricultural sector was good in the first three quarters of the year due to improved harvests in 2004. A particular challenge for the South African authorities is the very high unemployment rate, estimated at 27.8% as at March 2004. A 1.4% inflation rate was registered in 2004 compared with 5.8% in 2003. At the end of 2004 the Rand was being exchanged at 5.6 Rands to the American Dollar compared with 6.7 Rands to the Dollar at the end of the previous year - a 16% appreciation in twelve months. Between 2002 and 2004 the Rand appreciated by approximately 37% against the Dollar. In response to this situation the South African Reserve Bank reduced the discount rate by 7.5% in 2004. This points to a relatively sustainable recovery for the world economy over the period the period 2004 - 2005. However, steps must be taken to ensure more equitable growth between the various regions of the world. Risks to the global economy are related to the price of oil and developed economies' fiscal deficits.  - 7 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 111. NATIONAL SOCIAL AND DEMOGRAPHIC OVERVIEWlREVIEW 111.7. MILLENNIUM DEVELOPMENT GOALS (MDGs) Each year, the Review of the Economic and Social Plan allows the Government of Mozambique to take stock of progress to date towards the Millennium Development Goals (MDGs). The MDGs are a set of eight interrelated development targets set out in the United Nations' (UN) Millennium Declaration of 2000, to which Mozambique is a signatory. The goals include observable verifiable measures of national success in: eradicating poverty and food insecurity; attaining universal primary education; promoting gender equality; reducing infant mortality; improving maternal health; fighting HIV/AIDS, malaria and other diseases; guaranteeing environmental sustainability, and; developing a global partnership for development. This year's assessment is of particular interest because the first comprehensive five year review of progress towards the MDGs is set to take place in September 2005 at the UN's Millennium +5 Summit. This will summarise the global position vis-a-vis the MDGs and aim to map a way forward for the remaining ten years to 2015. It is also significant because the nation's principal strategic tool for the delivery of the MDGs, the Programme for the Reduction of Absolute Poverty (PARPA I), is in the process of being revised. This Section therefore provides a brief overview as to how far Mozambique has progressed towards meeting the MDGs, building on the assessment featured in the Review of the 2003 Economic and Social Plan. 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. The latest Household Survey (IAF) for 2002 - 2003 provides the most up-to-date data on poverty available. According to this data, 54% of the population is presently living in poverty (defined as those living on less than US$1 per day), down from 69% in 1996/7 (as measured by the previous IAF). This means that the PARPA I target of reducing poverty incidence below 60% by 2005 has been met. In the light of 8.2% economic growth in 2004, it seems that some further progress has already been made since the IAF. Since, however, there is no baseline data for poverty prevalence in 1990, a specific MDG target for 2015 is hard to define, although a simple extrapolation of PARPA Itargets would lead us to aim for a reduction of the proportion of the population in poverty to 44%. While this seems an achievable objective on present trends, we  - 8 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 must bear in mind the fact that full brunt of the HIVIAIDS pandemic has yet to be felt.' Finally, as mentioned in last year's PES Review, we also need to consider incorporating more sophisticated definitions and measures of poverty into, for example, PARPA II which as mentioned is being revised in 2005. 2. Attain Universal Primary Education Goal: Ensure that, by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling. The net enrolment rate for Ensino Primario 1 or EPI (the first 5 years of primary schooling) stood at 75.6% in 2004, up from 43.6% five years ago. This has been made possible by the expansion of the EPI school network, with an average annual increase of around 3,300 new schools per annum since 1999. However, while the overall enrollment rate is promising, there remain serious underlying problems. The EPI repetition and completion rates need to increase dramatically if the 2015 target is to be met, and regional disparities also need to be addressed. For example, at EPI level in 2004, repeating students represented around 21% of all students (compared to 21.9% in 2003). 3. Promote Gender Equality Goal: Eliminate gender disparity in primary and secondary education preferably by 2005 and to all levels of education no later than 2015. In 2004 the net enrolment rate for girls in EPI stood at 73.2%. The female participation rate at EPI level was 45.9%, and stood at 40.7% for EP2 level. These levels are similar to those observed in 2003 (45.3% and 40.0% respectively). Clearly, the levels attained to date show the need for a major increase in enrollment, retention and completion patterns for girls in order to meet the requirements of the MDGs. 4. Reduce Infant Mortality Goal: Reduce by two-thirds, between 1990 and 2015, the under-five mortality rate. The under five mortality rate (U5MR) stood at 201 per 1,000 live births in 1997 according to the results of the 1997 Demographic and Health Survey (DHS). The 2003 DHS indicated that the rate had fallen to 180 by last year. This is partly as a result of efforts to extend coverage of the Diphtheria, Tetanus, Pertussis and Hepatitis B vaccination, which in 2004 achieved 96% coverage. However, in order to reduce the USMR by two thirds on the 1990 level, Mozambique will need to meet a target of target of 82 deaths per 1,000 live births `Arndt C., 2003, `HIV/AIDS, Human Capital and Economic Growth Prospectsfor Mozambique,' Africa RegionWorking Paper Series, No. 48, World Bank.  - 9 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 by 2015. This suggests that more rapid progress needs to be made, especially in the light of the impact of HIV/AIDS. 5. Improve Maternal Health Goal: Reduce by three-quarters, between 1990 and 2015, the maternal mortality ratio. The only available baseline for this indicator is a 1995 figure of an estimated 1,062 maternal deaths per 100,000 live births.* This in turn gives a 2015 target maternal mortality rate of 266/100,000. According to the 2003 IDS, the maternal mortality rate in Mozambique is now around 408 deaths per 100,000 live births, suggesting a reduction of more than half in ten years. A simple extrapolation suggests that the 2015 target is feasible. 6. Fight HIVIAIDS, Malariaand Other Diseases Goal: Have halted by 2015 and begun to reverse the spread of HIV/A/DS. The HIV/AIDS pandemic is a grave cause for concern in Mozambique. The adult HIV prevalence rate stood at 13.6% in 2002, based on sentinel surveillance of pregnant women. To prevent and combat HIV/AIDS, the Government (through the National Council to Combat HIV/AIDS) has focused on implementing a nationwide HIV/AIDS education, information and communication campaign; setting up Voluntary Counselling and Testing Centres; improving the diagnostic capacity of laboratories and introducing antiretroviral treatment. About 8000 people were receiving antiretroviral treatment in 2004, including more than 4000 pregnant women to prevent vertical transmission to their babies. Goal: Have halted by 2015 and begun to reverse the incidence of malaria and other major diseases. Combating malaria, remains a key developmental objective, especially since its effects are exacerbated by HIV/AIDS. Moreover, the challenge in reducing it is a huge one. For example in 2003 only 17.8% of mothers with children under five possessed mosquito nets. In rural areas the figure was 12.2%. 7. Guarantee Environmental Sustainability Goal: Halve, by 2015, the proportion of people without sustainable access to safe drinking water. By 2004, the rate of coverage of safe water supply in rural areas had reached 43.2% (an increase of 3.8% on 2003) and in urban and peri- urban areas it had reached 36.8% (an increase of 0.8%). While these increases are promising (taking into account an estimated population growth rate of 2.4%), significant investments will need to be made to meet the 2015 MDG target. ~ Cited in `Report on the Millennium Development Goals: Mozambique,' UnitedNations, August 2002.  - 10- ECONOMIC AND SOCIAL PLAN EVALUATION 2004 IV. NATIONAL MACROECONOMIC OVERVIEW In 2004, the Government's economic and social policy focused on attaining the objectives of the Government Programme (Plano do Governo, 2000 - 2004). Actions were prioritised that contributed towards sustainable economic growth and reduction of absolute poverty and social inequalities. The strategy to combat absolute poverty is implemented through the Poverty Reduction Action Plan (PARPA) which sets out the major sectoral actions needed to attain the following objectives: promote sustained economic growth as a way of reducing poverty, particularly through supporting rural development; extend and improve thenetwork of socio-economic infractructure; develop human resources by increasing the quantity and improving the quality of education and health services, and strengthen the social protection networks that support the poorest and most vulnerable members of society. Hence, the principal macroeconomic objectives for 2004 were to: 0 achieve growth in Gross Domestic Product in the region of 8%; ensure that the average annual inflation rate is restricted to 8 - 9%; 0 achieve approximately 2% growth in the export of goods (excluding those from the large-scale projects); continue creating an environment that attracts investment to Mozambique whilst ensuring responsible environmental management; 0 expand and improve the quality of public education, health and judicial services and construct basic water, sanitation and road infrastructure; The preliminary results of the 2004 evaluation are as follows: 0 7.2% growth in GDP; 4.6% growth in production compared with the planned 4.5%; accrued inflation in the region of 9.3% (MABENA) and 9.1Oh (Maputo); 21% appreciation of the Metical; 1451.9 million USD of goods exported, compared with the planned 1274.5 million.  - 11- ECONOMICAND SOCIAL PLAN EVALUATION 2004 IV.1. GLOBAL AND SECTORAL PRODUCTION There was 4.6% growth in economic activity in 2004 in relation to 2003, mainly due to the performance of the manufacturing and mining industries and the transport and communications sector. The significant contribution of the manufacturing industry is explained by Mozal's increase in productive capacity with the start of its second aluminium production phase in the last six months of 2003. Excluding aluminium production, the overall production rate increased by 2.2%. The growth of the mining industry is almost entirely due to the fact that the Pande Temane gas field began producing large volumes of natural gas in February 2004. The positive performance of the transport sector can be explained by an increase in the number of air passengers. The entry of a second mobile phone operator (VODACOM) into the market has greatly increased the competitiveness of mobile and terrestrial telephone operators. Global and Sectoral Production % growth rates in volume - - Produ . 1 7003 7004 I 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 ExtractionIndustry 52.1 31.6 215.7 ManufacturingIndustry 3.9 14.9 12.7 ElectricityandWater 10.2 -12.6 5.7 Construction 104.6 -7.6 -14.6 Trade 1.I 5.3 -0.1 Repair Services 4.0 2.1 0.1 RestaurantsandHotels 2.8 8.6 1.I Transport& Communications -8.0 8.6 16.4 FinancialServices 1.7 0.8 0.9 PropertyRental 2.5 2.4 2.5 Servicesto Business 12.0 2.0 1.9 Services to Government 1.5 6.I 5.6 Services 7.1 9.7 8.5  - 12- ECONOMICAND SOCIAL PLAN EVALUATION 2004 On the negative side, there was a reduction in construction, explained by the conclusion of the construction phase at Mozal II and Temane and by the incomplete execution of the road building and maintenance plan. It is hoped that performance in the construction sector will improve in 2005 with the rehabilitation of National Highway NO1 and the implementation of other planned activities. However, this sector as a whole performed as planned for the year according to the 2004 Economic and Social Plan. Without the large-scale projects, production in the traditional sectors of the economy grew by 5.1%, not significantly higher than the overall economic growth rate of 4.6%. It would seem that the negative effects of the conclusion of the construction phases of the large projects have been offset by the positive effects of their entry into production. With a growth rate of 9.1%, the agriculturalllivestock sector has been expanding more rapidly than the economy as a whole. However, this sector is still highly vulnerable to climatic conditions. A. AGRICULTURE, LIVESTOCKAND FORESTRY The 2003/2004 agricultural season was affected by irregular rains nationwide, particularly during the first half of the rainy season (October and December 2003). However, the more regular rainfall in the country as a whole at the end of December and during the first quarter of 2004 greatly increased food crop production. In the country as a whole, inputs in terms of seeds and agricultural equipment were sufficient to meet the needs of subsistence farmers, except in Gaza, Tete and Nampula provinces. There were shortages of pesticides and seeds in these provinces and subsistence farmers lacked the purchasing power to buy agricultural equipment. The Government and its partners have made great efforts to make seeds available through agricultural fairs and normal business channels, as well as distributing kits of inputs free of charge to the most disadvantaged communities. AGRICULTURAL PRODUCTION (%VOLUME GROWTH RATES) 2002 2003 2004 Total 7.3 9.8 9.c Business 57.2 109.3 10.5 Family Total 5.2 3.4 8.8 Family Produce Sold 9.5 4.3 12.1 Own Consumption 2.9 2.8 6'9  - 13 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 The 2003/2004 agricultural season was a success, with high crop yields (particularly of cereals) in the northern provinces thanks to an increase in productivity and the total area of cultivated land. A total of 4,027,000 hectares were sown during the agricultural season. 55% of this area was used for cereals, 27% for cassava and 18% for vegetables. Approximately 111,095 hectares of sown land were lost to droughts, floods, pests and diseases, corresponding to 2.7% of the total sown area, affecting about 75,000 families. Growth in agricultural production in the region of 9% was registered in 2004. Business production and family cash crop production (excluding food produced for personal consumption) grew by 11.7%. The Government made a significant contribution towards these results by providing agrarian services and offering farmers incentives to use inputs and improved technologies. There was a 10.5% increase in exports in contrast to the results of the previous year. This can largely be explained by the increase in cotton production (69.9%), Mozambique's major export crop. In contrast, there have been reductions in the production of cashew nuts (-32.6%), copra (-3.1%) and sugar cane (-3.3%). Cashew nuts and copra production was affected by adverse weather conditions in the provinces producing these crops. There was also a high incidence of diseases such as helopeltis and anthracnose affecting cashew trees in the south of the country and the country's ageing cashew trees are becoming increasingly less productive. The lethal yellowing of coconut palms also affected coconut production. Great efforts were made to monitor the trade in cashew nuts and prepare a technical assistance programme for the General Union of Cooperatives' cashew processing factory in an attempt to increase production. In addition, approximately 900,000 cashew tree saplings were distributed to the family and private sectors to replace aging cashew trees and increase the number of these trees nationwide.  - 14- ECONOMICAND SOCIAL PLAN EVALUATION 2004 PRODUCTIONOF THE FAMILYAND BUSINESS AGRICULTURALSECTORS (% rates of growth involume 2002 2003 2004 EXPORTCROPS 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 Citrus 80.4 5.0 1.6 .Tea 39.3 0.9 19 3 Onions 45.3 105.6 -22.3 PRODUCTSFORINDUSTRY 98.5 80.5 28.4 Tobacco 58.3 73.2 68.3 Tomato 148.3 86.5 0.0 ,TOTAL 14.9 20.5 11.7 The dramatic fall in sugar cane production was caused by various factors: production was delayed until the second quarter of the year by adverse weather conditions; production was halted for three weeks at the Marromeu and Xinavane sugar processing plants in June and July and the Marromeu and Mafambisse sugar plantations suffered from a plague of Chilo caterpillars. The production of basic food crops grew by 6%. As most of the crops produced for sale fall into this category, these crops are crucial for family well being in that they ensure food security and provide families with the means to meet their basic needs. Although production in this group as a whole increased, there was a decrease in the production of rice and onions (-5.5% and -22.3%, respectively). The sale of maize increased by 16.1% due to Maize shortages in neighbouring Malawi and the bulk purchases made by the World Food Programme (WFP) in partnership with the Cereals Institute of Mozambique, particularly in the provinces of Manica, Tete, Zambezia, Niassa, Nampula and Cab0 Delgado.  - 1 5 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 Agricultural production indicators reveal that there was a notable increase in the productivity of food crops due to progressive increases in yield per hectare and increases in sown areas. However, methods of dealing with agricultural surplusses need to be improved. The high levels of production registered for family consumption (6.9%) partly reflects the difficulties that families face in selling their surplusses. This also partly explains the country's 430,000 tonne cereal shortage (mainly of rice and wheat) which had to be covered by imports. There was a dramatic growth in the production of crops for industry (28.4%) resulting from the high levels of tobacco production (68.3%). The sale of family sector produce was positive in 2004. The recovery of export crops was particularly notable thanks to the dramatic increase in cotton production (79.1%). Great efforts were madeby rural producers who were forced to replant their land three times in several regions, particularly in Nampula and Sofala where extensive areas were lost due to irregular rainfall. There were substantial increases in every crop group as a result of the increased yields of rural households, leading to a greater likelihood of food security. FAMILY SECTOR TRADE (% volume growth rate) 7002 7003 7004 EXPORTPRODUCTS -1.3 -4.7 17.3 Cashew -6.4 27.2 -32.6 Cotton -0.1 -27.1 79.1 Copra Sugar Cane 1.4 1.4 3.7 Citrus 66.7 0.0 0.0 BASICFOODPRODUCTS 4.1 5.4 7.8 Maize 8.1 1.o 15.0 Rice 0.6 19.0 -6.5 Sorghu 0.1 0.3 5.1 Cassava -0.8 3.8 4.3 ShelledPeanuts 0.8 0.0 20.0 Beans 15.1 1.7 7.2 Horticultur 5.6 7.4 13.9 Onions 41.O 55.6 6.5 PRODUCTSFORINDUSTRY 74.6 8.7 33.1 Tobacco 56.7 40.9 46.9 Tnmntn 1137 1 - 130 TOTAI 9.5 4.3 12.1  - 16- ECONOMIC AND SOCIAL PLAN EVALUATION 2004 7.8% growth was registered in basic food crop production. There were significant increases in maize, peanut and horticultural production. There was also growth in the production and sale of livestock in the business and family sectors. The increase in livestock production in the family sector was largely the result of a successful livestock support programme. According to recent data there are now more than a million cattle in the country: rapid progress is being made towards exceeding the peak of 1,500,000 cattle registered in the 1980s. LIVESTOCK PRODUCTION(% growth in volume) I- 1 2003 2004 SECT. SECT. SECT. SECT. 1IPoultry cowshulls 36. 27. 13. 11. Pigs 6.0 5.8 6.0 4.9 31. 0.2 19. 12. IFresheggs 784. 242. 41. 35. 1II ITotal ~~ 36. 16. 18. 12. Animal health activities continued to be implemented to increase the production, productivity and quality of livestock. There are excellent prospects for livestock production - in the cooperatives sector UGC has resumed egg production; a Mauritian project has been launched to produce chickens and eggs in Maputo province; a livestock project is being discussed between Mozambican and South African partners; two industrial abattoirs are nearing completion in Manica and poultry farms are being set up in Niassa. A national cattle breeders' association was recently established which should be of great value in developing this sector. Approximately 110 head of cattle were distributed to the family sector in Massingir, Guija, Chibuto and Mabalane districts under the ambit of the livestock re-stocking programme. 10 rams (of the same breed) were acquired by the same programme for the Napaha Livestock Support Posts, the Mapupulo ' Agrarian Station and for the Pemba/Metuge Agrarian Training Centre for breeding and subsequent distribution in Cab0 Delgado. 1,680 small ruminants were also distributed in the districts of Lichinga, Sanga, Nipepe, Majune, Cuamba and Mecanhelas and 9 pigs were distributed in Nipepe district.  - 17- ECONOMICAND SOCIAL PLAN EVALUATION 2004 The increase in the number of pigs was offset by an outbreak of swine fever- the greatest constraint to the development of this sector in Africa. The forestry and timber subsector registered a growth in production levels comparable to 2003 (5.6%), maintaining the steady growth registered over recent years. The production of tree trunks in the business sector increased by 15.8%, with a total of 111,523 trunks produced. Approximately 38% of these are extracted from Cab0 Delgado province, 21% from Zambezia and 17% from Sofala. There was also an increase in the production of firewood and charcoal as a result of the increased volume of forestry licensing. B. FISHERIES In 2004 production rates in this sector were affected by adverse climate conditions. The unusually low temperatures during the cold season had a negative effect on poduction and average income over the course of the year and led to a reduction in exports of seafood, particularly fish. Fish production decreased during 2004 in both the small-scale and business sectors, down by 4.4% and 3.2% respectively. Overall, fisheries production decreased by 3.8% in 2004. Activities are in progress to control fishing levels on the Sofala Bank to allow shrimp stocks to recover. At the same time, efforts are being made to stimulate the production of more stable resources such as Kapenta. Kapenta production in the business sector increased by a very significant 67.6% in 2004. Approximately 20,500 tonnes of various types of seafood were exported this year. Improved hygiene and sanitation in the fish processing units led to increases in the number of exporters and the volume of exports. 2002 2003 2004 TOTAL -4.6 11.1 -3.8 Business -6.5 -9.2 -3.2 FamilyTotal -1.4 41.6 -4.4 FamilyProduceSold 0.6 53.8 -5.5 Own Consumption -3.0 30.8 -3.2  - 18- ECONOMIC AND SOCIAL PLAN EVALUATION 2004 ARTISANAL FISHERY -(YOvolume- growth rate) I 7002 2003 7004 I Lobster -5.0 10.0 0.0 Crab 18.1 -55.6 -57.9 Gamba 0.0 0.0 0.0 Fresh& FrozenFish 0.3 66.7 -4.3 Kapenta 0.0 0.0 0.0 By-catch 0.0 0.0 0.0 Shrimp * -10.2 -8.3 -26.3 Cravfish 0.0 0.0 0.0 & 40.9 INDUSTRIAL FISHERY -(YOvolume - - growth rate) I 7007 7003 7004 I Lobster -4.4 7.7 100.0 Crab 11.3 -50.4 175.0 Gamba -10.0 -9.7 -28.2 Frozen& FreshFish -8.4 68.0 -53.1 Kapenta 46.9 16.2 67.6 By-catch 16.5 0.6 -8.5 Shrimp * 4.3 -17.5 9.3 Crayfish -11.I 37.5 20.0 &. - - 73 5 * Includingaquaculture Fisheries extension activities were conducted to promote family production. Activities included expermental fishing, disseminating fishing techniques, demonstrating the use of outboard motors and providing training in new fish handling, processing and preservation methods. The artisinal fishing community was encouraged to form fishing associations and participate in savings and credit schemes. There is also a growing number of projects collecting and processing artisanal products. It is hoped that these measures will increase the productivity of the national fishery and increase the value of produce. The planned rehabilitation of the Angoche fishing port and its subsequent return to full operational capacity will stimulate fishing activity in the northern region of the country.  -19- ECONOMICAND SOCIAL PLAN EVALUATION 2004 C. THE MINING INDUSTRY Total mineral production increased by 215.7% in 2004 compared with the previous year. Particularly high growth was registered for products such as natural gas, tantalite, limestone, gold and sand for construction purposes. In February 2004 natural gas began to be produced at the Pande-Temane field as planned. There were significant increases in production from June. The national natural gas network is due to be extended to Ancuabe at the end of 2005 creating good perspectives for the reactivation of graphite production in this area. MINERAL RESOURCES (% volume growth rate) - I 7002 7003 2004 I Coal 57.7 -15.6 -55.0 Bauxite 6.1 29.3 -23.9 Graphite 0.0 0.0 0.0 Crude Bentonite 0.0 0.0 0.0 treated Bentonite 128.3 18.0 -15.5 Sorted Bentonite -23.0 57.9 -32 5 a Activated Bentonite 0.0 0.0 0.0 Marble Slabs -34.8 2.5 33.6 Marble Blocks 41.6 -0.2 36.5 Uncut garnet 0.0 -61.3 511.O Cut stones 0.0 0.0 0.0 Gold -23.2 271.6 -10.8 Aquamarine -44.9 -69.4 132.1 Tourmaline 578.6 370.4 170.2 Tantalite 73.7 302.3 277.4 Beryl 6687. 44.2 -65.1 Sand 71.3 72.4 4.2 Limestone 78.4 3.6 18.2 Riolite 57.2 -9.6 5.8 Granite 1.2 -19.5 -3.4 Dumortierite -20.0 0.0 182.5 Natural gas 94 R 4.1 91405 1 TOTAL 57 1 ?I-6 715 7 1 There was a 55% decrease in coal production over the year: production ceased during the first quarter of 2004 while a new mine transportation system was being installed. The production of granite, bauxite, bentonite and dumortierite was affected by market problems as these particular minerals are only produced to order.  - 20 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 The production of tantalite increased dramatically (227.4%) with the opening of the new Naquissupa mine and the reopening of the Morrua and Marropino mines in Zambezia province. There was a significant increase in small-scale production due to the performance of licensed operators in Manica, Sofala, Zambezia and Nampula provinces. The Government also provided support to small-scale operators and rehabilitated access roads to production areas. D. MANUFACTURINGINDUSTRY Manufacturing industry as a whole, including aluminium production, grew significantly (12.7%) as predicted in the PES evaluation of the first six months of 2004. The manufacturing industry's industrial sector, including aluminium production, expanded by 17.2% as Phases I and II of Mozal became fully operational. The Phase II plant began operating in the second half of 2003. Mozal produced 547,606 tonnes of aluminium in 2004 compared with 409,407 in 2003, representing a 33.8% increase. Discounting aluminium production, the industry grew by only 5.2% due to the poor performance of varous industries (see table below). However, 9.8% growth was registerd in the food industry, partly due to its weight in the total structure of industrial production and partly due to the industry's dynamism in recent years. Growth in this area has had a multiplier effect on the performance of agriculture, transport, trade and other subsectors.  - -21 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 MANUFACTURING INDUSTRY-(%volume growth rate ) 2002 2003 2004 3.8 23.7 17.4 A decrease in growth in the first half of 2004 in the drinks and tobacco sub-sector was reversed as a result of investments in the tobacco industry. This has had a multiplier effect on agricultural tobacco production. The textile and clothing industry registered 10.9% growth in contrast to poor performance in recent years. The following factories contributed to the clothing industry's positive performance in 2004: Ninita, Belita and Maputo Clothing and factories working under the ambit of AGOA and SADC agreements. The Cicomo and the new ClMA company, producing fishing nets, contributed to the growth of the textile industry. There was a significant decrease in the industrial production of wooden furniture (-51.4%) with reduced demand for national timber. E. ELECTRICITY AND WATER The electricity and water sector grew by 5.7%, with the electricity sub-sector growing by 6.1%: a notable result considering that no increases in the production of energy in megawattdhour were planned this year because of the rehabilitation, modernization and automation work being carried out at Cahora Bassa. Fewer generators were producing energy for export to Zimbabwe (ZESA), Botswana (BPC) and the short-term regional market (STEM).  - 22 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 Energy production for the national market was unaffected by rehabilitation work at Cahora Bassa, growing by a considerable 12%. This reflects the increase in internal demand resulting from economic growth and the electrification of rural areas. The national grid has now been extended to cover the entire country and generators have been installed to provide electricity in district administrative centres. The supply of water continues to ,expand to meet the additional needs of the growing rural and urban population. F. CONSTRUCTION In 2004 there was a drop in levels of production owing to the conclusion of the construction phases of two large projects (Phase II Mozal and the construction of the gas pipeline to South Africa) and the fact that the road construction programme was not fully executed. ROADPROGRAMME 15,000 I_ 10,000 5,000 0 Road rehabilitation 1 I 714 I 827 I 819 I Overall, the construction sector decreased by 14.6%. As shown in the table above, the total number of kilometres of road rehabilited or maintained by the programme decreased by 7% compared with 2003. G. BUSINESS Business activity has remained stable in 2004 (-0.1%) with a fall in the level of imported goods. The majority of business activity revolved around the trade in internal sector goods: agriculture, fisheries, livestock, manufacturing industry (not including Mozal) and mining. Taken as a whole, the indicators reveal substantial increments in trade in these areas and a consequent increase in profit margins.  - 23 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 H. RESTAURANTSAND HOTELS The restaurant and hotel sector has expanded steadily over recent years. In 2004 performance was stimulated by the growing numbers of air passengers (as illustrated in the table in the following section) and by high-profile events held in Maputo such as the World Economic Forum and the ACP (Africa, Carribean and Pacific) Conference. The balance of payments indicated that tourism revenue was in the region of 95.3 million USD. Growth in the service sector has made Mozambique more attractive to both investors and tourists. New investments worth approximately 480 million USD were approved over the course of the year. I. TRANSPORTAND COMMUNICATIONS This sector grew by 16.4% in 2004 largely due to an increase in air travel. There were a variety of factors responsible for this increase, including: new points of entry into the country, the implementation of a new civil aviation policy, the simplification of licencing procedures, the entry of new aircraft operating out of Mozambique, the growth of tourism and the high-profile international events held in the country. TRANSPORTAND COMMUNICATIONS (YOvolume growth rate) I 2002 2003 2004 I RailTransport 5.7 68.8 13.6 RoadTransport -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-relatedServices 12.2 29.3 -47.0 CommunicationServices 28.8 2.8 15.7 TOTAL -8.0 8.6 16.4 Compared to the results achieved in 2003 there has been a 19.2% increase in road transport, explained by the performance of the privately-owned bus and minibus sector ('semi-coletivos'). There was a decrease of -2.4% in public transport due to several factors including an increase in the price of fuel and the greater elasticity of demand for public services in the face of fare increases. It is hoped that public transport services will improve with the purchase of new buses in 2005. Positive performance is also expected from private passenger transport  - 24 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 services with growing urbanisation and legislation to stimulate the licencing of vehicles with over 25 seats. Telecommunications services expanded with the entry of another mobile telephone operator into the market (VODACOM). IV.2. MONETARY AND FOREIGN EXCHANGE SECTOR A. Monetary and Financial Programme The medium-term objectives of the 2004 monetary programme are based on Government's principal economic objectives: inflation should not rise above 11%; the GDP Growth Rate should rise by 8%, the Bank of Mozambique's Net Domestic Assets should expand by 8.608 billion Meticais and the Net Foreign Reserves balance should be maintained at 778 million USD. These objectives were based on an estimated 15% expansion of the Money Supply and 18.4% expansion of credit to the economy (consonant with nominal GDP expansion). Although the increase in Monetary Base was greater than expected (at approximately 68.4 billion Meticais) the fact that Net Foreign Assets were also higher than expected (at 736 billion Meticais) meant that the Bank of Mozambique's Net Domestic Assets fell below the planned limit. The expansion of Credit to the Economy was far lower than expected due to the impact of retrenchment efforts to recover credit and the effect of the appreciation of the Metical. This also influenced the behaviour of the Money Supply which registered a very moderate annual variation (6.1%, compared with the planned 15% and the annual variation of 18.7% in 2003). The behaviour of the above aggregates contributed to the deceleration of annual inflation to 9.1% (IPC Maputo) compared with the expected 11YO. The table below shows the Monetary Programme's goals and execution rates up to the end of December (1st and 2nd semesters of 2004). Aggregates DeclO3 Mar Jun Sep Dec GoalslDecO4 Net Domestic Assets (billions of 1,577 1,184.7 1,918.9 -9,760 -9,115.9 -7,260.5 Meticais) Net Internat. Reserves- millions of 738 741 747 837 a50 816.7 USD Net Foreign Assets (billionsof 7,103 6,685.0 6,756.9 18,886 19,549 18,813 Meticais) Monetary Base (billionsof Meticais) 8,682 -7,869.7 8,675.8 9.126.2 10,433.4 10,365 Money Supply (balance variation) 18.7 15.1 16.4 11.7 6.3 15.0 Credit to the Economy (balance -1.1 3.6 1.I -1.1 -5.6 18.4 variation) - Annual Inflation- % 13.8 13.5 13.3 11.1 9.1 11.0 Exchange Rate YOannual variation 0.01 -10.3 -20.8  - 25 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 Monetary Policy The macroeconomic environment was affected by several internal and external factors during the period in question. The following were particularly influential: The strengthening of the Rand on the international market with an impact on the continuing depreciation of the Metical and the unpredictability of inflation in Maputo City (imported inflation). Continuing increases in the price of oil on the international market and consequent adjustments in the domestic market; a Delays in the disbursal of external support (deficit of 14.5 million USD up to June). Monetary policy continued to be supported by interbank, monetary and exchange market operations, complemented by banking persuasion and supervision. In this context, an intervention was made in Interbank Money Market (IMM) to regulate the liquidity of the system using Treasury and Monetary Authority Bills (BTs and TAMs). Interventions in the Interbank Money Market included: 0 Issuing Pre-announced Treasury Bills on a weekly basis with various terms (including from 1to 6 days); a Offering a greater volume of Treasury Bills, particularly longer-term Bills of 91 to 182 days. The Bank of Mozambique's interventions in Interbank Markets (Money and Exchange), aimed at controlling liquidity, culminated in December 2004 with the freezing of approximately 10,414 billion Meticais (compared with 5,188 billion in the same period in 2003) and with net sales of foreign exchange that exceeded sells in 2003 by approximately 46.7 million USD. In view of improvements in macroeconomic indicators, the Bank of Mozambique proceded to revise the main IMM intervention rates at the end of September, lowering the Permanent Outstanding Liquidity Facility rate from 18.5% to 13.5% and the Permanent Outstanding Absorption Facility rate from 8.25% to 6.25%. From 14th September, under Law no22/2004, Treasury Bills began to be issued for both State Treasury financing and for the purposes of monetary policy. Regarding exchange policy, liquidity freezing was intensified as planned via Interbank Exchange Market operations. The methodology for calculating the Central Bank's exchange rate of reference was altered in an effort to clarify the signal transmitted to the market concerning exchange rate trends.  - 26 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 In quantitative terms, foreign currency was sold on the Interbank Exchange Market to a value of 104.3 million USD, compared with purchases totalling 16.6 million USD, resulting in a net volume of sales of USD 87.7 million (with a total of 1,989.29 billion Meticais frozen). Changes in the Principal Monetaryand Financial Aggregates A. Money Supply The Money Supply (M2) aggregate stood at 34,236.7 billion Meticais in December, representing an annual variation of 6.1%, compared with the ceiling of 15% specified in the monetary programme. Compared with the same period in 2003, the aggregate decelerated by 12.6 percentage points, thereby negating the effect of the appreciation of the Metical against the USD. M2 registered 15.1% growth in the Total Deposits and Credit to the Economy in foreign exchange. Growth in M2 was stimulated by the increase in (i) Notes and Coins in Circulation (by 22%), associated with the pressure on the cash supply to satisfy the requirements of the trade in cereals at the end of the 1" semester3,in cotton and tobacco in the 3rdquarter and in cashew nuts in November and December; (ii) increases in Net Foreign Assets and (iii) the reduction of Net Credit to the Government and the increase in other liquid assets and liabilities in the system. The growth in total expenditure was essentially supported by total deposits which increased by 3.6% with variation reduced by decreasing the number of notes and coins in circulation. It is important to note that as a consequence of the stability of the Metical against the USD a greater volume of deposits was made in Meticais. Consequently the weight of the Metical within M2 rose from 49% in December 2002 to 52% in December 2003 and to 60.3% in December 2004. B. Credit to the Economy Credit to the Economy registered a balance of 13,512.5 billion Meticais, an annual reduction of 5.6% against -1 .I observed in December 2003. Negating % the effect of the Metical's appreciation, the retrenchments (1,I 77 billion Meticais) and the recovery of mature loans (144 billion Meticais) annual variation registered at 24.5%. Foreign exchange credit also increased, representing 58% of Credit to the Economy in December 2004 compared with 56% in the same period in 2003, an increase of 83 million USD in the stock of foreign exchange credit. Available data indicate that agricultural production in2004 was higher than inrecent years, putting greater pressure on the notes and coins incirculation than inprevious years.  - 27 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 There was a slight alteration in the structure of internal debt by sector. The three sectors with the highest debt levels in 2004 were Business (21%), Industry (18%) and Agriculture (11%). Over the past four years, the contribution of agriculture and industry to internal debt has decreased in line with the deceleration of real growth in these sectors over the same period. It should also be noted that the other sectors are responsible for approximately 38% of the total stock of credit allocated to the economy by the banking system. C. Interest Rates The Bank of Mozambique lowered its intervention rates in MMI: the Permanent Outstanding Liquidity Facility (FPC) rate fell to 13.5% and the Permanent Outstanding Absorption Facility (FPA) rate fell to 6.25%. The average rates set according to the volume of transactions in Treasury Bills, Monetary Authority Bills and Exchange Liquidity followed the same tendency, falling to 10.9%, 6.4% and 8.9%, respectively. The interest rates for credits and deposits in domestic currency continued the downward trajectory that began in 2001, in response to the downward signal from the monetary authority throughout the year. The interest rate for credit operations with a one year term fell from 28.1% in December 2003 to approximately 23.7% in 2004. Deposit operations also fell from 12.6% to 9.7%, a relative reduction in spread between the two rates to approximately 14%. The interest rate for credit in foreign currency rose from 6.7% to 8.4% and for deposits from 1.I Ohto 1.8%.This behaviour, contrasting with that of operations in domestic currency, can be explained by the Dollar's depreciation against the Metical. D. Exchange Rates In 2004, the Metical strengthened against the two principal currencies traded on the internal exchange market (the Dollar and the Rand). The Metical's annual appreciation rate against the USD escalated from 0.01% in December 2003 to approximately 21% in December 2004. The Metical's behaviour on the domestic exchange market can be explained by the following factors: 0 The weakness of the USD on the international market, explained fundamentally by the successive worsening of the current account deficit in the USA allied to the conflict in Iraq and the volatility of oil prices.  - 28 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 0 The increased supply of foreign exchange from the Bank of Mozambique on the Interbank Exchange Market, with liquid sales increasing from 139.7 million USD in 2003 to 187 million USD in 2004. A moderate increase in monetary supply in 2004. The Metical also strengthened against the Dollar on the parallel market (20.8% in 2004) with a difference between the average official and parallel exchange rates of approximately 2.6%. ExchangeMarket - TheValue of the MeticalAgainst the American Dollar `ear Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec iverage Rates- MTIUSD 2000 13,448 13,983 14,933 15,764 16,006 16,007 16,065 16,154 16,171 16,242 16,513 16,987 2001 17,323 17,869 18,492 19,105 20,081 21,299 21,797 21,821 22,065 22,401 23,077 23,153 2002 23,314 23,415 23,513 23,603 23,639 23,650 23,708 23,815 23,877 23,931 23,836 23,687 2003 23,801 23,809 23,817 23,810 23,815 23,777 23,668 23,744 23,735 23,775 23,802 23,835 2004 23,688 23,840 23,844 23,829 23,747 23,436 23,048 22,674 22,244 21,201 20,419 19,483 kcumulated Growth Rate (%) 2000 1.5 5.5 12.7 19.0 20.8 20.8 21.3 21.9 22.1 22.6 24.6 28.2 2001 2.0 5.2 8.9 12.5 18.2 25.4 28.3 28.5 29.9 31.9 35.8 36.3 2002 0.7 1.1 1.6 1.9 2.1 2.1 2.4 2.9 3.1 3.4 2.9 2.3 2003 0.5 0.5 0.5 0.5 0.5 0.4 -0.1 0.2 0.2 0.4 0.5 0.6 2004 -0.6 0.0 0.0 0.0 -0.4 -1.7 -3.3 -4.9 -6.7 -11.1 -14.3 -18.3 4nnual Growth Rate (%) 2000 8.8 12.9 20.3 26.5 28.1 27.6 26.9 26.5 25.7 25.2 26.1 28.2 2001 28.8 27.8 23.8 21.2 25.5 33.1 35.7 35.1 36.4 37.9 39.7 36.3 2002 34.6 31.0 27.1 23.5 17.7 11.0 8.8 9.1 8.2 6.8 3.3 2.3 2003 2.1 1.7 1.3 0.9 0.7 0.5 -0.2 -0.3 -0.6 -0.7 -0.1 0.6 2004 -0.5 0.1 0.1 0.1 -0.3 -1.4 -2.6 -4.5 -6.3 -10.8 -14.2 -18.3 In the first six months of the year, the Metical depreciated by 8% against the Rand, associated with a strengthening of the South African currency on the international market in the context of the Mozambican market`s high dependency on South African imports. However, the tendency was reversed during the last six months of the year, with the Metical having appreciated by 4% against the Rand by December 2004. In comparative terms, the Metical performed better against the Rand in 2004 than in 2003. During the equivalent period in 2003, accumulated annual depreciation was approximately 14% with annual depreciation standing at 29.8%.  - 29 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 Average Rates MTIUSD 2000 2,210 2,257 2,339 2,460 2,351 2,347 2,385 2,426 2,349 2,272 2,262 2,279 2001 2,332 2,377 2,405 2,442 2,579 2,749 2,743 2,717 2,682 2,564 2,533 2,322 2002 2,178 2,186 2,175 2,244 2,416 2,442 2,439 2,398 2,382 2,410 2,527 2,687 2003 2,775 2,904 3,006 3,117 3,210 3,031 3,172 3,228 3,243 3,419 3,485 3,662 2004 3,510 3,531 3,613 3,673 3,520 3,605 3,724 3,611 3,449 3,358 3,382 3,393 Accumulated GrowthRate(%) 2000 2.4 4.6 8.4 14.0 8.9 8.7 10.5 12.4 8.8 5.3 4.8 5.6 2001 2.3 4.3 5.5 7.2 13.2 20.6 20.4 19.2 17.7 12.5 11.1 1.9 2002 -6.2 -5.9 -6.3 -3.3 4.1 5.2 5.0 3.3 2.6 3.8 8.8 15.7 2003 3.3 8.1 11.9 16.0 19.5 12.8 18.0 20.1 20.7 27.2 29.7 36.3 2004 -4.2 -3.6 -1.3 0.3 -3.9 -1.5 1.7 -1.4 -5.8 -8.3 -7.6 -7.4 Annual GrowthRate(%) 2000 5.1 9.7 13.8 19.4 15.4 14.1 14.6 16.4 10.4 6.6 6.0 5.E 2001 5.5 5.3 2.8 -0.7 9.7 17.1 15.0 12.0 14.2 12.8 12.0 1.: 2002 -6.6 -8.1 -9.6 -8.1 -6.3 -11.1 -11.1 -11.8 -11.2 -6.0 -0.2 15.7 2003 27.4 32.9 38.2 38.9 32.9 24.1 30.1 34.6 36.1 41.9 37.9 36.3 2004 26.5 21.6 20.2 17.8 9.6 19.0 17.4 11.9 6.4 -1.8 -2.9 -7.4 E. Supervision and Regulation In the first six months of the year a merger took place between Banco Comercial de lnvestimenfo (BCI) and the Banco de Fomenfo (BF), reducing the total number of banks operating in the market to 10. In the same period, mechanisms were adopted to strengthen bank supervision, establishing the respective legislative revisions and financial regulations. These include the Credit Institution Law and the Financial Association Law recently approved by parliament. IV.3. INFLATION The analysis of inflation rates is based on the aggregate index known as MABENA, combining the price indices in the cities of Maputo, Beira and Nampula to provide a balanced index for the country as a whole. The table below shows that the accumulated inflation rate from January to December stood at 9.3%. The accumulated inflation rate in Nampula was slightly higher than average at 11.9% while the rates in Maputo and Beira were marginally lower at 9.1% and 8.5% respectively.  - 30 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 MABENA PRICE INDEX -BASE DEC 1998 = 100 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC iNDEX 2002 141.4 144.0 142.9 141.7 140.6 141.4 142.8 143.7 144.9 145.7 148.0 151.7 2003 153.1 155.5 158.4 159.8 160.6 160.3 160.9 161.3 161.9 163.1 164.4 169.0 2004 174.1 175.7 177.5 178.9 179.2 178.7 179.3 179.1 179.2 180.2 181.2 184.7 MONTHLY VARIATION(Yo): 2002 1.6 1.8 -0.7 -0.9 -0.7 0.6 1.0 0.6 0.9 0.6 1.5 2.5 2003 0.9 1.6 1.8 0.9 0.5 -0.2 0.4 0.3 0.4 0.7 0.8 2.8 2004 3.0 0.9 1.0 0.8 0.2 -0.3 0.3 -0.1 0.0 0.6 0.6 1.9 Annual GROWTH RATE (%): 2002 24.5 25.9 24.0 21.5 19.7 18.9 17.2 14.7 13.9 11.4 9.6 9.0 2003 8.3 8.0 10.8 12.8 14.2 13.3 12.6 12.3 11.7 11.9 11.1 11.4 2004 13.7 13.0 12.1 11.9 11.6 11.5 11.4 11.1 10.6 10.5 10.2 9.3 ANNUAL ACCUMULATED GROWTH RATE (Yo): 2002 1.6 3.5 2.7 1.8 1.1 1.6 2.7 3.2 4.2 4.7 6.4 9.0 2003 0.9 2.5 4.4 5.3 5.8 5.6 6.0 6.3 6.7 7.5 8.4 11.4 2004 3.0 3.9 5.0 5.8 6.1 5.7 6.1 6.0 6.0 6.6 7.2 9.3 I I Source: NationalStatisticsInstitute The fall in inflation was associated with the performance of the real sector of the economy, the moderate expansion in the Money Supply and the positive trend in public accounts. In addition, the appreciation of the Metical against the Rand and Dollar absorbed the pressure on the price of non-food goods associated with the continuing rise of the oil price on the international and domestic market. Although there was a variation of -0.1% in June and none at all in July, the rising tendency of Maputo City's price index continues to be of concern. In accumulated and annual terms, however, the rate stood at 9.1Oh compared with the 11% estimated for the end of the year. In contrast to 2003, inflation has been strongly influenced by the index of non- food goods which has increased in accumulated terms by 4.8%. In particular, the accumulated variation in housing prices was registered at 22.4% to December, associated with the continuing rise in the price of oil on the international and domestic market and consequent price adjustments. The slight depreciation of the Metical against the Rand also influenced the index, particularly the behaviour of food prices.  - 31 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 PRICE INDEX MAPUTO BASE DEC 1998 100 - - JAN FEE MAR APR MAY JUN JUL AUG SEP OCT NOV DEC INDEX: 2002 144.1 146.0 145.0 145.4 145.6 147.1 148.6 149.4 149.6 150.2 153.0 157.5 2003 157.1 160.7 164.9 166.9 169.7 168.3 168.3 169.4 170.6 172.3 173.8 179.2 2004 184.4 185.3 187.1 189.6 190.8 190.7 190.7 189.8 189.5 190.6 192.7 195.5 MONTHLYVARIATION (%): 2002 -0.2 1.3 -0.7 0.3 0.1 1.1 1.0 0.6 0.1 0.4 1.9 2.9 2003 -0.3 2.3 2.6 1.2 1.6 -0.8 0.0 0.6 0.7 1.0 0.9 3.1 2004 2.9 0.5 1.0 1.3 0.6 -0.1 0.0 -0.5 -0.2 0.6 1.1 1.5 ANNUAL GROWTH RATE (%): 2002 22.9 24.9 23.2 22.2 19.5 18.3 16.6 15.2 14.3 10.5 8.9 9.1 2003 9.0 10.1 13.7 14.8 16.5 14.4 13.2 13.3 14.0 14.7 13.6 132 2004 17.4 15.3 13.5 13.6 12.5 13.3 13.3 12.0 11.1 10.6 10.8 9.1 ANNUAL ACCUMULATED GROWTH RATE (%): 2002 -0.2 1.2 0.5 0.7 0.9 1.9 3.0 3.5 3.6 4.1 6.0 9.1 2003 -0.3 2.0 4.7 6.0 7.7 6.9 6.9 7.5 8.3 9.4 10.4 13.t 2004 2.9 3.4 4.4 5.8 6.5 6.4 6.4 5.9 5.7 6.3 7.5 9.1 I Source: NationalStatistics Institute 1 PRICE INDEX BEIRA BASE DEC 1998= 100 - JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC INDEX: 2002 146.3 147.7 146.2 142.1 140.8 142.3 143.5 144.9 148.0 149.0 150.3 151.1 2003 153.4 153.5 155.9 157.2 158.5 160.5 161.8 161.4 161.2 162.3 163.6 166.4 2004 171.2 174.4 176.4 176.5 175.9 174.9 176.6 177.3 177.6 178.4 178.2 180.5 MONTHLY VARIATION (%): 2002 5.1 0.9 -1.0 -2.8 -0.9 1.0 0.9 1.0 2.1 0.7 0.9 0.5 2003 1.6 0.1 1.5 0.9 0.8 1.3 0.8 -0.2 -0.1 0.7 0.8 1.7 2004 2.9 1.8 1.2 0.1 -0.3 -0.6 1.0 0.4 0.1 0.5 -0.1 1.3 ANNUAL GROWTH RATE (%): 2002 28.4 25.5 22.9 17.7 18.2 18.9 17.3 14.2 14.8 14.9 11.7 8.5 2003 4.9 4.0 6.6 10.6 12.5 12.9 12.8 11.4 8.9 8.9 8.8 10.2 2004 11.6 13.6 13.2 12.3 11.0 9.0 9.1 9.8 10.1 9.9 9.0 8.5 ANNUAL ACCUMULATED GROWTH RATE (%): 2002 5.1 6.1 5.0 2.1 1.2 2.2 3.1 4.1 6.4 7.1 8.0 8.5 2003 1.6 1.6 3.2 4.0 4.9 6.3 7.1 6.9 6.7 7.4 8.3 10.2 2004 2.9 4.8 6.0 6.1 5.7 5.1 6.1 6.5 6.7 7.2 7.1 8.5 Source: NationalStatistics Institute  - 32 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 PRICE INDEX NAMPULA BASE DEC 1998 100 - - JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC INDEX: 2002 125.4 133.2 132.6 131.4 126.7 123.9 125.4 125.1 126.3 127.2 129.2 136.1 2003 141.4 144.3 143.6 142.9 136.9 135.2 136.7 136.8 137.2 136.6 137.6 142.9 2004 148.3 149.1 150.3 150.5 150.1 149.3 149.8 150.7 151.8 152.9 152.7 160.0 MONTHLY VARIATION (Yo): 2002 1.4 6.2 -0.5 -0.8 -3.6 -2.2 1.2 -0.3 1.0 0.7 1.6 5.4 2003 3.8 2.1 -0.5 -0.5 -4.2 -1.2 1.1 0.1 0.3 -0.4 0.7 3.8 2004 3.8 0.6 0.8 0.1 -0.3 -0.5 0.4 0.6 0.7 0.7 -0.1 4.i ANNUAL GROWTH RATE (%): 2002 23.2 32.0 30.8 29.1 25.3 22.3 20.6 14.7 11.5 8.1 7.9 10.0 2003 12.7 8.3 8.3 8.7 8.0 9.1 9.0 9.4 8.7 7.5 6.5 5.0 2004 4.9 3.3 4.7 5.3 9.6 10.4 9.6 10.2 10.7 11.9 11.0 11.S ANNUAL ACCUMULATED GROWTH RATE (%): 2002 1.4 7.7 7.1 6.2 2.4 0.1 1.3 1.1 2.1 2.8 4.4 10.0 2003 3.8 6.0 5.5 5.0 0.5 -0.7 0.4 0.5 0.8 0.4 1.1 5.0 2004 3.8 4.4 5.2 5.3 5.0 4.5 4.9 5.5 6.3 7.0 6.9 II.! Source: National Statistics Institute IV.4. BALANCE OF PAYMENTS An analysis of the principal components of the Balance of Payments shows: A reduction in the Current Account deficit from 953 million USD in 2003 to 843 million USD in 2004. 0 There was a decrease in the Capital Account, despite an increased flow of capital from 395 million USD in 2003 to 463 in 2004. In contrast, foreign direct investment fell from 342 million USD in 2003 to 241 million USD in 2004. The global deficit in the Balance of Payments was largely financed by reserve assets. In 2004, the value of exported goods reached 1,504 million USD, an increase of 460 million USD compared with the equivalent period in 2003. The major exports were electricity, shrimp, sugar and cotton. 2003 2004 Exports 1044 1504 of which large projects 681 1049 Growth Rate of Exports 28.90% 44.06% Imports 1741 2035 of which larae proiects 337 312  - 33 - ECONOMICAND SOCIAL PLAN EVALUATION2004 EXPO~~S USD - IO"6 2003 2004 % Cresc. Shrimp 25.9 90.3 248.5 Amendoa de Cajlj 0.2 1.6 715.3 Cotton 16.5 32.8 98.9 Copra 0.0 0.1 Sugar 0.8 35.5 4340.6 Tyres 1.2 1.7 37.8 Wood 13.3 28.5 114.6 Cashew Nut 2.6 4.4 69.4 Electricity 58.9 102.3 73.6 Bunker's 0.8 23.5 2836.9 Sasol (Gas) 31.3 69.7 120.7 73.1 TOTAL 189.9 472.6 148.9 Source: INE. Customs bulletins,HCB, MOZAL reports The volume of imports reached 2,035 million USD in 2004, an increase of 294 million USD comparedwith the previous year. 200 I 200 % Oil Derivatives 86. 18' 108: Electricity 20. 75.3 268. Other goods 319. 767. 140. Total not Mozal 426. 1,023. 139. Mozal Imports 104. 307. 195. Gen. Total 530. 1,331. 150., SourceBM 1" & 2ndsemester report Despite increases in construction, communication, security and government services, there was a larger deficit in the services balance compared with the same period in 2003. The deficit increased from 257 million USD to approximately312 million USD.  - 34 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 V. PRINCIPAL DEVELOPMENTS BY SECTOR X I . SOCIAL AREA A. EDUCATION In 2004 the education sector continued to focus on increasing access to education and improving the quality of teaching. Institutional capacity-building activities were also implemented at the various levels of educational administration. Increased Access As a result of the Government's policy of expanding the education sector, the number of students in general education rose by approximately 10% in 2004 compared with the previous year. The table below shows that 98.4% of the target number of students in primary and secondary education was attained in 2004. The student population in first and second level Primary Education (EPI and EP2) increased by approximately 8.7 and 15% respectively compared with the previous year. The number of students in secondary education (ESGI and ESG2) rose by 19 and 16.7% in the first and second cycles respectively. Level 2000 2001 2002 2003 2004 YO % Execut. Growth Actual Actual Actual Actual Planned Actual Plan 04/03 EPI 2,271,265 2,513,094 2,643,126 2,825,971 3,127,624 3,071,564 98.2 8.7 EP2 209,230 265,994 302,912 355,618 422,621 409,279 96.8 15.1 ESGI 78,335 98,095 116,356 141,795 158,418 168,798 106.6 19.0 ESG2 10,057 11,968 14,019 18,291 22,640 21,350 94.3 16.7 Total 2,568,887 2,889,151 3,076,413 3,341,675 3,731,303 3,670,991 98.4 9.9 In terms of educational coverage indicators, the gross admissions rate for EPI was 137.6% (8.5% higher than the figure for 2003). This signifies that the system's capacity for admitting more children into the first grade increased at a similar rate to that registered in previous years. The net and gross education rates in EPI in 2004 were 75.6% and 121.2% respectively. Building new schools and training teachers continued to be prioritized in response to the high demand for educational establishments in recent years. 99.5% of the plan for building new schools in 2004 was realized, resulting in a 5.3% expansion of the school network. This is presented in the table below.  - 35 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 Level 2000 2001 2002 2003 2004 % of Plan % Growth Actual Actual Actual Actual Planned Actual Executed R04/R03 EPI 7,072 7,496 7,771 8,071 8,418 8,373 99.5 3.7 EP2 522 680 823 950 1,121 1,116 99.6 17.5 ESGl 93 106 116 125 141 140 99.3 12.0 ESG2 20 23 27 29 30 30 100.0 3.4 Total 7,707 8,305 8,737 9,175 9,710 9,659 99.5 5.3 In terms of staff training for general education, the number of trainees in the 11 Primary Teacher Training Centres (CFPPs) increased by 12.7% compared with the previous year. 7 Primary Teacher Training Institutes (IMAPs) were running daytime courses in 2004, corresponding to a 77.8% plan realization rate. A total of 4,040 students were enrolled in these institutions, corresponding to a 96.5% realization rate. Teacher Training (General Education)2000-2004, Total Trainees Level I 2000 1 2001 I 2002 I 2003 1 1% of PlanI % 2004 Growth Actual Actual Actual Actual Plan Actual Executed R04/R03 CFPPs (Basic)-Daytime 4,326 4,534 4,997 5,193 5,084 5,853 115.1 12.7 IMAPs (Mid-level)-Daytime 2,544 3,385 3,672 3,841 4,186 4,040 96.5 5.2 IMAPs (Mid-level)-Evening 0 190 773 1,708 1,874 2,243 119.7 31.3 Total 6,870 8,109 9,442 10,742 11,144 12,136 108.9 13.0 In response to teacher shortages in the system, the staff recruitment process continued in 2004. The number of teachers recruited for general education was approximately 13% higher than in 2003, representing 95% plan realization. A low percentage of primary teachers working in EPI and EP2 schools have undergone professional training (55% and 66.5% respectively). In ESG1 and ESG2 only 53.4% and 81.6% of teachers are trained, respectively. 2003 2004 %of Plan % growth Actual Plan Actual k ~ ~ t e dR041R03 I I 1 EPI (1st -ievelClass) 5th 1 42,838 50,080 II 47,598 95.0 11.1 EP2 (6th -7th Class) 9,139 11,713 10,743 91.7 ESGl (8th 10th Class) 3,523 4,545 4,568 100.5 ESG2 (11th --12th Class) 645 901 759 84.2 17.7 Total 56345 67,239 63,668 94.7 13.4 Source: MINED  - 36 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 Education for girls continued to be promoted in 2004. The proportion of girls in EPI and EP2 increased from 45.3% and 40% respectively in 2003 to 45.9% and 40.7% in 2004. The net rate of girls' schooling in EPI was 73.2%. However, in ESGI and ESG2, participation rates decreased from 40.6% and 37.7% respectively in 2003 to 40.2% and 37.4% in 2004. Regarding the implementation of the Gender in Education Strategy, an action plan was formulated to improve gender parity in a number of pre-identified districts. This plan will be launched in a meeting attended by representatives from all the provinces. At the same time, a study has begun into the possibility of including a directive to improve gender parity in the schools covered by Direct School Support (ADE). Actions to combat the sexual harrassment and abuse of female students also contribute towards gender parity. This issue has already merited a ministerial dispatch, which is one of the instruments to be disseminated for implementation in schools. Literacy and Adult Education 5,288 literacy centres were operating in 2004, 10% above the planned target. 537,593 learners attended the 1st and 2nd years of literacy courses, corresponding to a 94.8% realization of the plan. 123,314 students attended the 3rd year of teaching, corresponding to 99.5% plan realization. A literacy programme using radio and television is being developed as a means of supporting the formal literacy centres. The preparatory phase was completed in 2004 and implementation is expected to begin in 2005. TechnicaVProfessionaIEducation At the level of elementary education, 11 schools were operating countrywide (100% plan realization) with 1,268 students enrolled in courses (66.3% realization of the plan). The number of enrolments increased by 1.4% compared with the previous year. Basic level daytime courses were taught in 25 schools which enrolled a total of 19,878 students (99.7% of plan realization). Compared with the previous year, the number of enrolments increased by 4.1%. Intermediate level daytime courses were taught in 7 schools as planned. 3,516 students were enrolled in these institutions, corresponding to 104.5% plan realization, The number of enrolments increased by 7.3% compared with 2003.  - 37 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 Distance Teacher Training and Education In 2004, a Secondary Distance Education pilot project was launched in Nampula province to improve distance education materials and integrate them into the activities already in progress, with a view to extension to other districts. Basic level teacher training activities continued and the intermediate level teacher training course by distance education was launched. Improving Educational Quality Efforts in this area focused on implementing the new basic education curriculum, training teachers and providing direct support to schools. CurricuIar Revision In 2004, the new basic education curriculum began to be introduced into the first grades of each cycle, namely in the Ist, 3rd and 6th classes. Before the new curriculum was implemented, capacity-building activities were conducted for basic education teachers and trainees. The main educational innovations of the new curriculum are as follows: i. An integrated curriculum for the seven basic education grades, with knowledge structured by area rather than by separate discipline. ii. A national curriculum with a compulsory nucleus of knowledge, skills and learning outcomes for all students in the country, with additional space for the introduction of the 'local curriculum'. iii. The promotion of learning cycles rather than academic years. iv. The introduction of Mozambican languages as the languages of instruction in schools, to be administered through a bilingual approach. v. The introduction of English in the 3rd cycle (6th class). vi. The introduction of Vocational Training and Moral and Civic Education. Teacher Training The Teacher Training Strategy (EFP) was conceived to address some fundamental aspects of the Strategic Plan for Education. Efforts are presently being made in the area of educational provision, with a special emphasis on teacher training.  - 38 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 The formulation of the Teacher Training Strategy was based on three general principles. Firstly, the recognised aim of teacher training is to improve the quality of education. This means that every measure in this strategy focuses on the need to improve the quality of teacher training. The second general principle stems from the fact that current teacher training models are fragmented, erratic and incoherent. Training policy aims to achieve a fully co-ordinated approach to teacher development which clearly defines the functions, contributions and interrelationships of all major parties. The third general principle is that the Teacher Training Strategy should integrate initial training, in-service training and continuous professional development as a way of establishing a solid career structure for every teacher. In this context, MINED formulated and began to implement a continuous training system for teachers known as 'CRESCER'. CRESCER (School Strengthening Courses: Systematic, Continuous, Experimental and Reflective) is a continual professional development system for teachers, based in the ZIPS and supported by the District Education Directorates and Teacher Training Institutions. They system began to be introduced in 2004 in 20 pilot districts, involving 10,180 teachers (about 17% of the 58,332 teachers in Basic Education). The system consists of participative, cyclical, cascade training which can be implemented flexibly. The Teacher Training Institutions are responsible for implementing training activities in each area of the curriculum in close collaboration with the schools and ZIPS. Other initiatives for accelerating teacher training MINED entered into an agreement with the Universidade Pedagogica (UP) to provide training for secondary school teachers. In 2003, 559 in-service teachers with intermediate-level training were admitted to various degree level courses in each branch of the university. In 2004, a further 800 teachers entered Universidade Pedagogica to pursue degree level courses. At the same time, MINED will continue to formulate joint strategies with UP and other higher education institutions to create other alternatives for Secondary level teacher training, such as training by distance education. In co-ordination with various educational institutions, MINED has designed and piloted other alternative teacher training models. Trials of school-based training indicate that effective teachers can be trained relatively rapidly and cheaply. 400 teachers were trained in Inclusive and Special Education.  - 39 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 Direct School Support (ADE) In implementing activities under the ambit of the Strategic Plan for Education (PEE), MINED launched and implemented the 2nd and 3rd phase of its Direct School Support programme. The objective of the programme is to create a 'school quality improvement fund' as a way of decentralising administrative resources to school level. The fund is allocated, in principle, in the form of an annual endowment in two separate tranches. The fund is managed by a School Council composed of teachers, parent representatives, the school director and district director of education. The programme allocates financial resources directly to public EPI primary schools (including those in the EPCs) enabling them to purchase basic school materials for the benefit of pupils and teachers. In its second phase, the programme allocated sums ranging from 3.5 to 90 million meticais to each school (depending on the number of students and classes in the school). In the third phase, sums between 4.2 and 70 million meticais were allocated to each school. The second and third phases of the programme benefited approximately 8,100 and 8,400 primary schools respectively. Institutional Development Strateqic Plan for Education MINED initiated the process of revising its sectoral strategy with the aim of reformulating its objectives and aims and allotting the resources necessary for implementing the second phase of the strategy (2005-2009). The revision process is reaching its conclusion, and the preliminary document has already been presented to co-operation partners and received positive feedback. Training for School Directors Training for school directors is a continuous activity. At present, approximately 70% of principals at every level have participated in the training programme. Deputy directors and administrators have also been involved in these training activities to ensure that the three individuals comprising the directorate of each school are equipped with the instruments and competences they need to do their jobs effectively.  - 40 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 To ensure that these training activities are sustainable, MINED has begun to prepare a School Director's Manual as a tool to support school management. HIGHER EDUCATI0N In 2004, special attention was given to expanding access to Higher Education, improving the quality of courses and increasing the educational opportunities of those living outside Maputo by increasing the number of educational institutions. Present efforts to increase the number of educational institutions include preparation and planning to set up polytechnics in Manica, Gaza and Tete provinces. The following activities have been carried out to prepare the new Higher Education Law: 0 Formulating a system of accreditation, evaluation and quality control for higher education; 0 Formulating a system for accumulating and transferring academic credits in Mozambican higher education; 0 Implementingthe distance education strategy; 0 Preparing terms of reference for the the Preparatory Commission for the National Quality Assessment Committee (CNAQ), and; 0 Applying transitional methodology for the creation and operationalisation of the IES. In 2004, the Quality Improvement and Innovation Fund (QIF) implemented two more application cycles to promote investment in higher education, distributing a total of 2,524,239 USD amongst 27 projects as follows: e 9 allocations of financial assistance to the following higher education institutions: ACIPOL, ISUTC, ISPU, UMBB, ISCTEM, UCM and UDM; 0 3 allocations of financial assistance to academic staff in UEM and UP, and; e 15 allocations of financial assistance for scientific research. These funds were allocated in the following investment areas: 52% for equipment (laboratories, computer centres, libraries), 15% to support research, 7% for educational materials, 7% for staff post-graduate study, 7% for technical assistance, 7% for exchange visits and 7% for rehabilitating infrastrucure.  -41 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 A total of 202 scholarships were awarded through the Provincial Scholarship Programme as presented in the table below. Scholarships began to be awarded in Sofala, Zambezia and Cab0 Delgado and management commissions were established in these provinces. Scholar: Sector Public ISRl 0 0 117 56 ISPU 0 8 6 0 14 ISCTEM 2 3 0 0 5 Private ISUTC 1 0 2 3 6 MBB 0 2 1 0 3 U.J. Piaget 0 1 0 0 1 Sub Total 5 33 43 4 85 Sub Total [ 66 I 61 1 66 9 I202 1 The table below presents the numbers of students enrolled in higher education from 2000 to 2004. 2000101 2001102 2002103 2003104 2004* Institution Women Total Women Total Women Total Women Total Women Total UEM 1,918 7,406 1797 7,094 1,969 8,046 1,867 7,349 2,446 9,683 UP 605 2,225 724 2,136 751 3,072 751 3,072 816 3,634 ISRl 86 287 77 251 90 307 142 520 159 517 ACIPOL 10 124 20 163 35 230 45 294 57 356 NauticalSch. I 24I 165 ISCTEM 403 791 575 1,030 516 999 672 1,327 798 1,533 ISPU 776 1,429 995 1,798 995 1,798 1,083 1,992 1,147 2,150 ISUTC 15 79 31 139 47 191 54 230 82 326 UCM 483 1,199 576 1,402 730 2,301 721 1,875 863 2,128 UMBB 5 52 40 156 112 453 130 386 357 563 UDM 73 180 368 683 Sub Total 2 1,682 3,550 2,217 4,525 2,400 5,742 2,733 5,990 3,615 7,383 Total 4,301 13,592 4,835 14,169 5,245 17,397 5,538 17,225 7,117 21,738  - 42 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 B. SCIENCE AND TECHNOLOGY In the area of Science and Technology, efforts were focused on stimulating sustainable development by creating an integrated information production and management system capable of meeting the country's needs. The principal activities carried out the sector in 2004 are as follows: Disseminating the Science and Technology Policy; Implementing the Science and Technology Policy action plan; Promoting good-quality scientific research using competitive funds (QIF - Quality Innovation Fund and FIP - Poverty Research Fund); Promoting innovation for development; Promoting Science and Technology at regional (SADC) and international levels; Organising the 2nd Science and Technology Exhibition; Launching the 1st Science Awards for women and young people; Training employees in short-, medium- and long-term courses, and; Hiring new personnel. C. HEALTH Activities in the Health sector focused on expanding the health network and improving the quality of services to the general public, with the principal objective of bringing down sickness and death rates in the country. Health Care Provision Overall activity in the health sector, measured by the number of health units and the number of external consultations, rose by 7.8 and 14.3% respectively, compared with 2003 as a result of the expansion of the health network and improvements in the quality of services provided by health care professionals.  - 43 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 2000 2001 2002 2003 2004 Change (Yo) Indicators Executed Executed Executed Executed Executed R04/R03 GLOBAL ACTIVITY Health Units (Thousand) 61,954 65,739 65,422 70,134 75,606 7.8 Health Unitsllnhabitant 3.62 3.74 3.62 3.77 3.98 EXTERNAL CONSULTATIONS External Consultations (Thousand) 14,350 15,074 15,021 17,058 19,505 14.3 External Consultationsllnhabitant 0.83 0.85 0.83 0.92 1.02 Expanded Vaccination Programme In 2004, of special note is the reduction in the incidence and prevalence of the principal preventable diseases as a result of vaccinating children of 0 to 23 months, children in the first classes of primary school and women of child- bearing age (15 to 49). The target group coverage of all the principal components of the Vaccination Programme increased in comparison with the previous year. As shown in the table below, the plan for 2004 was fully executed. 2000 2001 2002 2003 2004 Indicators Executed Executed Executed Executed Planned Executed BCG [O-11 Months] 108.1% 95.1~, 1 0 7 . 9 ~ ~1 0 7 . 9 ~ ~98.0% 124.0 VAS [9-23 Months] 95.6% 94.3% 92.7% 96.7% 95.0% 101.0 DPTIAnti-Polio and HB (3'dose) IO-11MesesI 87.8% 83.9% 87.0% 91.1% 95.0% 96.0 MotherIChildHealth Programme and Family Planning (SMIIPF) In view of the improvements in motherkhild health, activities in 2004 continued to focus on increasing access to and availability of essential services for women and children, prioritising rural areas. Activities included training MotherKhild health professionals and distributing equipment of various types for pre-natal care and delivery. In general, coverage increased compared with the previous year, as shown in the table below.  - 44 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 2000 2001 2002 2003 2004 Indicators Executed Executed Executed Executed PlannedI Executed Pre-Natal Consultations 104.9% 105.3% 106.6% 109.5% 99.5% 1119.0% Hospital Deliveries 39.7% 41.2% 43.0% 45.1% 47.0% 49.0% Post-Partum Consultations 49.5% 50.5% 53.8% 57.4% 54.0% 65.0% Family Planning (New Users) 7.0% 7.6% 15.3 16.7% 18.0% I5.8% 1s' Child Consultation (0-11Month) 154.2 151.9% 148.7% 145.3% 9a.oy0 163.0% 1st Child Consultation (0-4 Years) 58.0 48.0% 56.1 65.2% 60.0% School and Adolescent Health Provincial nuclei were set up to reactivate the school health groups and adolescent health services were established in health units in Gaza, Maputo, Tete, Nampula, Niassa, Zambezia, Manica and Sofala. The multisectoral sexual and reproductive health programme for adolescents was implemented in Zambezia, Tete, Manica, Sofala, Gaza, Maputo Province, Maputo City and Niassa. Nutrition Programme To improve the population's nutrition, priority activities included nutritional surveillance, mapping food and nutrition vulnerability, providing technical support for implementing the provincial nutrition programme and combating micronutrient deficiencies, particularly for women of childbearing age, pregnant women and children. The stunting index fell from 6.4% in 2003 to 6% in 2004 and the low birth weight indicator fell from 10.1% to 9.7%. Develoment of the PoDulation's Nutritional State, 2000-2004 4 Indicators 2000 2001 2002 2003 2004 Stunting Index 8.5 7.8 6.9 6.4 6.0 Low Birth Weight 11.7 11.7 11.3 10.1 9.7 Epidemio1ogical SurveiIlance In 2004 efforts continued to focus on improving capacity for registering and analysing the main transmittable and non-transmittalbe diseases and developing on-the-job training courses in the diagnosis and early treatment of diseases. Improved knowledge of preventitive measures and improvements in the capacity to diagnose and treat diseases in their initial stages helped to control the incidence of reported cases. There were 9823 cases of measles reported in 2004, a reduction of 62.1% compared with the previous year.  - 45 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 537 cases of Miningococcal Meningitis were reported in 2004 compared with 653 cases the previous year. It is important to note that most of these cases are not actually Miningococcal Meningitis but other types of viral meningitis. 517,282 cases of simple diarrhoeia were registered in 2004 compared with 522,479 cases in 2003. There was also a reduction in the reported cases of dysentry, falling from 139,691 cases in 2003 to 130,595 in 2004. The number of cases of neonatal tetanus has remained stable over recent years. However, during 2004 there were only 7 reported cases compared with 24 the previous year, representing a significant reduction of 70.8%. In 2004 there were 22,035 reported cases of cholera and 80 deaths: a 0.36% lethality rate. The number of reported Malaria cases is still growing (4,997,174 in 2004 compared with 4,952,769 in 2003) and the number of deaths caused by Malaria is also increasing. These increases are largely due to the fact that more cases of Malaria are now being registered at health units. The HIV/AIDS situation in the country continues to be of great concern. The number of reported cases of AIDS began to increase in 1998 and in 2004, 10,494 cases were reported. 51.9% of those infected were women and the 25 to 29 age group has the highest incidence of reported cases. The provinces with the greatest percentage of cases are Maputo City (45.7%) and Gaza (12.2%) while the lowest proportion of cases were reported in Niassa (O.Ioh) and Cab0 Delgadao (1.7%). Education, information and communication campaigns are being conducted nationwide to combat the spread of HIV/AIDS. 63 new Counselling and Voluntary Testing Centres (GATVs) were opened in 2004 surpassing the target of 50. A total of 113 health units now provide GATV services. The diagnostic capacity of laboratories was improved in 2004 and antiretroviral treatment (TARV) was introduced. Although the Government has made great efforts to combat the pandemic, in 2004 an estimated 100,000 people died of HIV/AIDS countrywide while approximately 60,000 people were treated for HIVIAIDS in a health unit. The approval of the plan to expand HIV/AIDS health care and treatment lead to an increase in the number of people receiving antiretroviral treatment from approximately 2,000 patients in 2003 to approximately 8,000 in 2004. There was better coverage and treatment for pregnant women with HIV and more effective prevention of vertical transmisision from mother to newborn baby. More than 67,700 pregnant women received counselling and were tested in 2004, 10,800 (15.9%) of whom were HIV-positive. More than 4,000 of these women received treatment to prevent vertical transmission.  - 46 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 In the area of Tuberculosis and Leprosy, the priorities in 2004 were to train personnel, supervise treatment in the health units and raise patients' awareness of the importance of treating these diseases. A total of 31,514 cases of TB were reported in 2004 (including return cases). Of the 30,995 new cases, 16,998 were cases of positive or contagious bacdoscope. Medicines During 2004, activities in the Medicines Headquarters focused on completing the update of the medicine management procedures and preparing manuals explaining these new procedures. National, provincial and district seminars were held to introduce the procedures, covering a total of 1700 health professionals involved in medicine management including nurses and pharmacy and clinic personnel. Expansion of the Health Network Although information about the expansion of the health network is still incomplete, the Government continues to prioritise the development of the primary health network in rural, peri-urban and urban areas, together with the construction of housing for health personnel. The health network expanded at primary and secondary levels with the conclusion of more than 5 new health units and 7 houses for personnel. 7 institutions were rehabilitated and expanded including health centres and rural, general and provincial hospitals. A total of 14 projects were completed in 2004. For example, the new rural hospitals in Mueda and Muxungue were opened and the Mocuba and Gurue hospitals were rehabilitated and extended. The expansion and improvement of the health network was stimulated by the approval of the Sector Investment Plan in 2003 which set out priorities in the sector as a whole. Human Resources One of the main objectives in this area is to improve the quality of human resources working in the health sector by training professionals to provide good quality health care which is equitably distributed among the population. In 2004, 591 basic level health professionals, 646 intermediate level professionals and 16 specialist doctors successfully completed their training. The Higher Institute of Health Sciences (ISCISA) opened in 2004 offering three courses: a BSc in Surgery, an MSc in general nursing and an MSc in motherkhild nursing.  - 47 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 LEVEL 2000 2001 2002 2003 2004 Specialist Doctors 8 6 13 21 16 Intermediate Level 86 219 368 86 646 Basic Level 546 608 483 749 591 Total 640 833 864 856 1,253 D. LABOUR In 2004, programmes were implemented to promote employment and improve employment infrastruture and professional training. Employment laws and regulations were adopted that are better suited to the country's present stage of development. Social security system services were expanded to cover the entire country. Legal Framework The process of revising the Labour Law was begun. Terms of reference were drawn up and three regional public seminars were held in the southern, central and northern zones of the country. Employment, Labour and ProfessionalTraining The following activities were implemented as part of continuing sustained efforts to expand labour infrastructure and access to professional training: Continuing the construction of Professional Training centres in Pemba and Quelimane; 0 Signing a Memorandum of Understanding with China to collaborate in the construction of three Regional Training Centres in Maputo Province, Sofala and Nampula, and; 0 Starting work on the Vilanculos Professional Training Centre. The following job creation activities were implemented: 0 Providing support in agricultural tools, equipment, cattle and goats as part of a social reintegration programme for former workers in South African mines. The programme has benefited a total of 1,532 ex-miners organised into associations in Maputo (Magude), Gaza (Chokwe) and lnhambane (Massinga).  - 48 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 Training for 133 micro/small business owners, 67 of whom were women, in Sofala and Nampula provinces; 0 Financing rural shop micro-projects under the ambit of FARE, creating 100 jobs and expanding the commercial network in Nampula province, and; 0 Granting 5,475,000,000 Meticais in credit for 5420 small business owners through SOCREMO. 1,073 unemployed trainees (73 more than planned) benefited from various types of professional training activities. In 2004, 4,600 job applicants found employment countrywide, 2,359 through job centres and 2,241 through direct applications. 16,772 unemployed people were registered in the country's job centres, competing for the 3,788 posts registered at these centres. In 2004, 47,282 Mozambicans were recruited to work in South African mines representing a 9.7% reduction compared with the previous year. Professional Relations Inspections were conducted in 2935 establishments to monitor compliance with the Labour Law (89% plan execution for 2004 and a 7.1% decrease compared with 2003). A total of 83,732 employees were monitored during this period (66.22% of whom were men) corresponding to a 12.6% reduction compared with the previous year. During these inspections, evidence was found of 3178 legislative infractions. Legal action was taken in 25.2% of these cases and reprimands issued in the remaining cases. In 2003, 2247 legal infractions were discovered with legal action taken in 884 of these cases. Dialogue was promoted as an alternative to labour conflicts and strike action. 180 companies were visited ( I8,761 employees) to disseminate labour legislation and encourage employers and employees to discuss labour regulations and arbitration processes collectively. Social Security Under the ambit of extending social security services to the districts, work began to rehabilitate the future headquarters of the Bilene-Macia District Directorate and change the status of the Chibuto and Manica district offices, turning them into District Directorates.  - 49 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 Social security services were computerised in 2004 in an effort to improve the quality of service. In 2004 there were 542,582 social security system beneficiaries (a 5% increase over 2003) while a total of 16,384 companies made contributions to the system (2,259 more than the previous year). E. WOMEN AND SOCIAL ACTION In 2004, attention was concentrated on building institutional capacity, raising the status of women, promoting social security and providing care for vulnerable target groups, particularly children, women and elderly and disabled people. The principal actions in this area included: Building institutional capacity e Various training and capacity-building courses for 188 Social Action employees. e Studies into 'Poverty and Social Exclusion' in the provinces of lnhambane and Maputo City; 'Violence against Women and Prevention Strategies' and 'Community capacity to provide support and protection for orphaned and vulnerable children in the context of HIV/AIDS' in the provinces of Zambezia, Tete, Manica, Sofala and Gaza. The overall objective of these studies was to improve the quality of information about various support programmes. The construction of the Mahotas Community Centre and rehabilitation of the Special Education School no2 in Maputo. Raisins the status of women The creation of the National Council for the Advancement of Women (CNAM). The dissemination of the National Action Plan for the Advancement of Women. The provinces of Cab0 Delgado, Sofala and Niassa were given support to prepare their provincial plans. Seminars on the role and rights of women in society. The extension of special services in police stations to protect and combat violence against women and children. These services are presently available in Maputo City, Gaza, Sofala, Tete, Zambezia and Niassa; 15,725 women were involved in income-generating projects (agriculture and livestock); 629 in Literacy and Adult Education courses; 812 in professional  - 50 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 training courses (in the areas of dressmaking, cooking and pottery) and 259 became members of agricultural associations. Protectinq Children 0 Preparing the National Action Plan for Children. 0 The 2nd Session of the Children's Parliament and the 1st National Meeting of the Permanent Commission of the Children's Parliament. Under the ambit of locating and reuniting families, approximately 673 children were documented and 200 reunited with their families (168% and 57% of plan execution for 2004). 2003 2004 Plan % change Indicators Executed Planned Executed Execution R04iR03 (Yo) Number of Children Documented 1,197 400 673 168.3 -43.8 Number of Children Reunited 429 350 200 57.1 -53.4 Source: MMAS The following activities were implemented in the area of Pre-School Education: 0 1,144 children were enrolled in State-run pre-schools, corresponding to 67% of plan execution, a decrease of 23% compared with 2003; 0 9,178 children were enrolled in private pre-schools countrywide, an increase of 15% compared with the previous year; 0 27,195 children were cared for by 660 teachers in the 422 community pre- schools, a 27% decrease compared with 2003. Pre-SchoolEducation 2003 2 14 Plan % change Indicators Executed Planned Executed execution R041R03 (%) Number of State Pre-Schools 15 15 15 100.0 0.0 Number of Children enrolled 1,483 1,700 1,144 67.3 -22.9 Number of Private Pre-Schools 103 100 100 100.0 -2.9 Number of Children enrolled 7,954 7,300 9,178 125.7 15.4 Number of Community Pre-Schools 533 500 422 84.4 -20.8 Number of Children enrolled 37,410 32,000 27,195 85.0 -27.3 Number of Pre-School Teachers 870 700 660 94.3 -24.1 Source: MMAS  - 51 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 The following activities were conducted in the area of Services to Disadvantaged Children: 0 8,490 children were enrolled in 67 centres for street children and ex-street children. 39 of these centres, providing services to about 5,867 children, offer both day and boarding facilities. 0 179 children were enrolled in 8 State children's homes, compared with 345 children in the same number of homes in 2003; 717 children were cared for in 12 private children's homes, compared with 685 children in 14 homes in 2003 (a 5% increase in the number of children in private homes compared with 2003). 2003 2004 Change Indicators 1Executed Execution R041R03 Numberof Centres for Street Children 71 80 67 Numberof Children enrolled 10,659 7,559 8,490 112.3 -20.3 Numberof State Children's Homes 8 8 8 100.0 Number of Children enrolled 345 114 179 157.0 -48.1 Number of Private Children's Homes 14 13 12 92.3 -14.3 Number of Children enrolled 685 628 717 114.2 The following activities were implemented in the area of institutional care for the elderly: Dissemination of the Policy for the Elderly in Inhambane; 298 elderly people cared for in 9 State centres for the elderly; 258 elderly people cared for in 11 private centres; 42 houses built and presented to elderly people in lnhambane (20), Sofala (20) and Zambezia (2); 0 6,533 vulnerable elderly people identified at community level and 1208 integrated into food, clothing and hospital programmes. More than 4,380 of these were identified in Maputo City, and; 0 6 elderly people were reunited with their own families in the provinces of lnhambane (4) and Manica (2).  - 52 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 Proaramme for the Elderlv 2003 Planned I Executed 2004 Plan % change Indicators Executed Execution R04iR03 (%) State Centres for the Elderly 9 9 9 100.0 0.0 NO. of elderly people cared for 112 215 298 138,6 166.1 Private Centres for the Elderly 12 13 11 84.6 -8.3 No,of elderly people cared for 462 400 258 64.5 -44.2 The following activities were implemented under the ambit of the Programme for Disabled People: 0 7,000 disabled individuals were identified, 2790 assessed and 4292 disabled children were integrated into various family and community programmes; The draft of the National Plan for the Disabled Person was prepared, and; Specialists and teachers received training in sign language in Nampula. Services for the Disabled % change Indicators Executed 2003 P?+ Planned Executed Execution R04iR03 (%) Disabled People Identified 1,498 6,000 7,000 116.7 367.3 Disabled People Assessed 355 1,500 2,790 186.0 685.9 Disabled Children integrated into Projects 424 800 4,292 536.5 912.3 Number of Transit Centres 6 6 6 100.0 0.0 Disabledpeople Treated 302 521 116 22.3 -61.6 Special Schools 3 3 3 100.0 0.0 Number of Pupils 308 300 207 69.0 -32.8 Institutefor the Visually Impaired 1 1 1 100.0 0.0 Number of Pupils 75 75 81 108.0 8.0 Source: MCAS Under the ambit of combating drug abuse and supporting prisoners, seminars were held in several prisons to raise awareness about the consequences of drug abuse. As part of the Food Aid Programme, support was provided to 67,643 families (direct beneficiaries), corresponding to 73.2% plan execution and a decrease in 15.6% compared with the number of beneficiaries the previous year. This reduction was due to the fact that beneficiaries who are capable of working were transferred to other development programmes (Social Benefits for Work, Income Generation and Community Development). 91% of beneficiaries were elderly people.  - 53 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 A new ranking system and new Regulations were introduced in 2004 for the Food Aid Programme and the Programme's procedure manual was published. Women with Malnourishedchildren Source: MMAS Under the Social Benefits for Work Programme payments were made to approximately 2,891 direct beneficiaries (82.2% of whom were women), representing 14.4% of plan execution. This programme provided employment for about 2,500 beneficiaries from the Food Aid Programme, mostly female heads of household and women with malnourished children. The Income Generation Programme implemented 165 micro-projects benefiting approximately 2,612 heads of household (91.2% female), representing 8.1% of plan execution. The Community Development Programme continued to implement various projects in the areas of health, education, professional training, fish farming, drinking water supply and low-cost sanitation, covering approximately 50 communities countrywide and benefiting approximately 25 thousand households. The Direct Social Support Programme provided compensation for disabled people living in poverty. F. WAR VETERANS The Government implemented the following actions under the ambit of the Coordination of War Veterans' Affairs and the 2004 Economic and Social Plan: The process of establishing pension scales for war veterans continued. A law was approved to setting new deadlines for establishing pensions for Veterans of the War for National Independence;  - 5 4 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 The process began of issuing identification cards for Veterans; 17 scholarships were allocated for Veterans' children out of the 23 requests submitted to UEM and UP under the terms of the co-operation agreement with these two institutions; Veterans were trained in small project management under the ambit of the Veterans' Social Reinsertion Projects; Historical locations were identified and registered with the objective of preparing a map of former army bases used in the War for Independence, and; Maintenance work was carried out at the Mongoe and Caiave basis in Zambezia; the Mucuti, Sussundenga, Nhacaduzuhuzu and Guru basis in Manica, Beira and Cab0 Delgado and at the Ngungunhane base in Niassa. G. CULTURE Activities focused on conserving the country's cultural heritage and promoting awareness of cultural heritage with the objective of strengthening national unity and affirming Mozambican identity. Cultural Heritage The priority was to identify and conserve historical monuments and locations countrywide, involving local communities. Inventories were drawn up of historical monuments and locations in Beira City and the districts of BOzi, Caia, Marromeu and Cheringoma. Inventories were made of the Chinhamapere rock paintings in Manica province and the army bases used in the War for Independence in Cab0 Delgado, Niassa, Tete, Manica and Sofala. Ethnological and historical surveys were conducted and the results disseminated to promote awareness of cultural heritage and socio-cultural diversity. Library and museum service improvements resulted in an increased number of visitors. Visitors to the National Library of Mozambique increased from 36,862 in 2003 to 44,543 in 2004. The number of visitors to the Provincial Public Libraries increased from 211,362 in 2003 to 350,000. Employees received intermediate level training in Librarianship and Documentation.  - 55 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 Cultural Action The provincial and district 2nd National Festival of Traditional Music and Song was held in Manica, Tete, Sofala and Zambezia. Debates and seminars were held about the importance of Cultural Associations in Gaza, Tete, Sofala and Zambezia provinces. Research was conducted into music, art and traditional dance and art training courses were held in Niassa, Nampula, Sofala, Zambezia, Tete, Manica, Inhambane, Gaza and Maputo City. Under the ambit of the Project to Combat Pirating and the Author's Rights Law, debates were held and information disseminated about the importance of recording copyright and the need to monitor the activities of music producers, importers and retailers countrywide. Book, music and video fairs were held across the country with the participation of publishers, bookshops, recording studios, the Mozambican Association of Filmmakers (AMOCINE) and the Mozambican Writers' Association (AEMO). A draft of the National Book Policy was drawn up. To promote film, 84 video outlets were licenced in the provinces of Sofala, Nampula, Inhambane and Maputo city. Legal Administration Activities in this area included: Starting the process of revising the Public Show RegulaLms (Law 10/88 Preparing the Specific Statute for llha de Moqambique; Preparing the Statute for the llha de Moqambique conservation office, and; 0 Preparing the Culture Sector Strategic Plan. Cultural and International Exchange Activities in this area included the 3rd Meeting of CPLP Culture Ministers and the Baluarte Festival on llha de Moqambique, involving artists from Mozambique and the islands of Reunion and Mayotte.  - 56 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 H. YOUTH AND SPORTS In 2004 activities focused on promoting youth associations and income- generating activities for young people with a view to promoting sport and national development . Youth Technical and methodological support was provided to raise capacity within the 42 new youth associations in Tete, Zambezia, Manica and Cab0 Delgado. Activities also continued to disseminate the Chokwe Declaration. The National Strategic Plan for Youth was approved and the 1st National Directory of Youth Associations was published, listing approximately 280 national and local youth associations. Under the ambit of Youth Leader training and awareness-raising, 87 .youth association leaders from the Municipal districts of Catembe and lnhaca were trained in issues related to HIV/AIDS and sexual and reproductive health. In addition, 70 young people from Gaza and Zambezia provinces, including association directors and managers, were trained in association management, business planning and income generating projects. As part of the Gera@o Biz Programme, 67 educators/activists from Cab0 Delgado, Tete and Zambezia were trained to deliver educational messages. Under the ambit of the 'My Future and My Choice' project presently being implemented in 13 districts in Manica, Sofala and Zambezia provinces, approximately 325 couple educators received training in counseling, gender and children's rights. In an attempt to stimulate employment, self-employment and other sources of income, the National integrated Social Action, Employment and Youth project continued to be implemented in the provinces of Maputo, Gaza, Sofala, Manica, Nampula and Cab0 Delgado. In 2004 the Programme provided technical support ' to the following existing projects: breezeblock production, cattle breeding, cashew tree production, small business promotion and fishing. sport As regards the preparation of legislation and other subsidiary regulations for the national sport system, the Strategic Plan for Sport Development was completed.  - 57 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 Actions to promote sport nationwide included monitoring the activities of the Maragra 'Mozambique in Movement' Sports Centre, as part of the Mozambique in Movement Programme which covers basketball, football and athletics. The Sports Law was prepared and began to be disseminated under the ambit of activities to improve the national sport system. The following actions were implemented in the area of training and building the capacity of sports personnel: 0 Training 476 trainers and 167 referees for football, basketball, volleyball and athletics, and; Training and raising the capacity of 110 sports personnel countywide. A factory is currently being built to produce sporting equipment and materials. I. ENVIRONMENT Throughout 2004, actions were implemented to protect the environment and encourage the responsible use of natural resources, prioritising intersectoral co- ordination. Intersectoral Co-ordination and Institutional Development Dissemination and discussion of the environmental initiative, NEPAD; Preparation of the Environment Sector Strategic Plan; 0 Revision of Manuals about handling dangerous waste, aimed at civil society, NGOs, decision makers, politicians and the industrial sector, and; 0 Regulations prepared about dangerous waste. EnvironmentalManagement Under the ambit of coastal management, an inventory was made of the present state of the Rovuma, Lurio, Save and Umbeluzi basins in Mozambique. In the area of urban environment management, the following activities were implemented: Preparation of the Specific Project for Solid Urban Waste Management in suburban areas of Beira and Dondo cities;  - 58 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 Preparation of the National Project of Solid Urban Waste and conclusion of the Management Strategy for Integrated Solid UrbanWaste Management; Preparation of the technical directive for the creation and operation of landfills for Solid Urban Waste; Dissemination of the National Integrated Strategy for Solid Waste Management and dissemination of the experiences of the Urban Zone Sustainable Development Centres in Tete, Lichinga and lnhambane cities, under the ambit of the Five Cities Project; Dissemination of practices of planting vegetation to combat erosion in Gurue Municipality, and; Implemeniting small and micro projects to improve the environment in Quelimane, Mocuba, llha de MoGambique, Pemba and Montepuez, under the ambit of the Five Cities Project. Environmental Impact Assessment One of the priority actions in 2004 was to update legislation to prevent and/or combat environmental degradation caused by the implementation of development projects. Environmental impact assessment criteria were revised and the assessment criteria for mining activites were prepared. Actions continued to assess and monitor the environmental impact of development projects; the national pesticides inventory was completed and environmental impact study reports and environmental management plans were assessed and revised. Territorial Planning and Ordinance The following general activities were implemented: Conclusion and dissemination of the Methodological Guidelines for the Planning and Ordinance of Rural Settlements; Beginning work on the new curriculum for the diploma in Planning and Environment; Implementation of the Reclassification Project for Informal Settlements and the Vulnerability Reduction Project in co-ordination with the Municipal Councils of Maputo, Chokwe, Tete and Quelimane. The following Regional Planning activities were implemented: Preparation of the Mandimba town structural plan; Conclusion of the Chibuto city plan;  - 59 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 0 Curricula revision of the diploma in Physical Planning, and; 0 Revision of the Methodological Guidelines for preparing Land Use Plans; Urban Planning activities included preparing Structural Plans for Mandimba, Montepuez, Metangula, Wimbe, Bilene Beach and Maputo. EnvironmentalPromotionand Dissemination Environmental education, awareness-raising and dissemination activities were implemented throughout 2004. Seminars, debates and commemorative events took place and information sheets and radio and television programmes were produced on environmental issues. Environmental Legislationand InternationalAgreements Several international agreements were ratified and preparations were made for ratifying others. V.2 ECONOMIC AREA A. AGRICULTURE The agricultural and natural resource sector's integrated sectoral plan (PROAGRI) continued to be implemented as part of the national poverty reduction strategy. Under the ambit of increasing family agricultural production to ensure food security by making improved seed available and diversifying crops, the following activities were implemented: 0 Establishing approximately 3269 demonstration fields of various crops: (including 407 of cow pea and 932 of maize), particularly in Nampula province; 0 Implementing 42 on-farm demonstrations of peanut, soya, beans, sunflowers and sweet potato in Majune (Niassa); Under the ambit of promoting increased agricultural productivity by encouraging the use of improved techniques, the use of inputs, plant and animal protection, post-harvest activities and the broadening of agricultural extension, the following activities were implemented:  - 60 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 4,926,815 fowl in the family and business sectors were vaccinated against Newcastle Disease; 326,355 cattle were vaccinated against Foot and Mouth Disease; 826372 against anthax (bacillus anthacis) and 122,184 against blackleg (clostridium chauvoei). Seed multiplication activities were conducted in 144 fields including 64 fields of maize, 10 of rice, 2 of sorghum, 18 of cow pea, 7 of beans, 3 of peanuts, I 8 of cassava, 4 of sweet potato, 2 of cotton, 1 of cashew nut, 5 of mixed crops and 7 of fruit trees; Rat plagues in maize crops were brought under control in the districts of Chokwe, Guija and Xai-Xai; Seeds and other inputs were delivered for pilot programmes and fields were planted to demonstrate crop varieties; Demonstration crops were harvested from seed multiplication fields of maize, sunflower, soya, potato and beans and were processed at the Lichinga Agrarian Station; Several varieties of orange, yellow and white pulp sweet potato were multiplied at the Chokwe Agrarian Station; Approximately 150,000 families of subsistence farmers were trained in various technologies with the aim of raising producers' living standards. Training sessions focussed on post-harvest issues; soil conservation, livestock technologies and soil fertility; Training activities were conducted on pesticide use in the provinces of Nampula, Cab0 Delgado and Niassa; Activities to promote irrigation to increase family sector production and productivity included the following: a 5,683 hectares were identified for rehabilitating or constructing irrigation schemes. Various types of small-scale irrigation system were constructed on 791 hectares of land inclusing 16 hectares of land in Kanimambo and 200 hectares in Tete; 34% of management plans and 34% of forestry concession applications were approved. The following activities were implemented under the ambit of the programme to support the use of animal traction for transport: 20 teams of bulls were distributed to subsistence farmers benefiting approximately 10 families in Chokwe district. Approximatetly 1680 small ruminants were distributed in the districts of Lichinga, Sanga, Nipepe, Majune, Cuamba and Mecanhelas and 9 pigs were distributed in Nipepe district.  - 61 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 Activities to promote the sustainable use of natural resources with local communities, private organisations and other entities were as follows: Licences were issued for exploiting firewood and construction materials; Certificates were issued for stocks of wood products produced during the 2003 season; Analyses were made and technical reports prepared on export licence applications presented by forestry companies; Activities in the area of forestry and wildlife were monitored, products in stock and export products were inspected and routine work was carried out by mobile brigades to support the fixed inspection posts and SDFFB posts; Seminars were held to disseminate the Forestry and Wildlife Law in the communities; A training course was held for 20 extensionists from the provincial Forestry and Wildlife service in Sofala province; 422 individuals were charged and goods confiscated for transgressions of the Forestry Law; 2878 eucalyptus and pine trees were planted through community reforestation projects; Firewood traders were encouraged to apply for forestry licences in Mabalane; Solar-powered driers were built to dry mushrooms in Mecuburi and approximately 245 ivory points were computerised in Tete province; The digital system for collecting data about fires was consolidated; information was processed and provincial and national maps were produced; Local impact projects for local communities, the private sector and other agents were conducted as follows: 8 107 producers participated in peanut agroprocessing demonstrations involving 3 associations in Meconta district; To improve efficiency: 8 A total of 2,709 applications for DUAT authorisations were submitted countrywide for various purposes, covering an area of 396,266  - 62 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 hectares: 2,117 processes were approved, 6 rejected, 223 are being processed and 79 submitted for approval; 0 Approximately 552 land exploitation plans in Maputo province and 102 in Nampula province were inspected under the ambit of DUAT; 0 A survey was conducted into existing concessions in the Limpopo reserve and the areas mapped. Activities to improve access to trade and market information and financial services for small-scale producers included the following: Trade was monitored and action taken to combat the illegal trade in sugar; 0 4 micro-projects were implemented for the extension committees in Matewere (Angonia), Ntengo-Wambalame in Tsangano and Mussacama in Moatize; 0 50 posters were distributed about import, transit and export procedures for agro-forestry products, live organisms and other materials; 0 Micro-credit was provided for 60,000 clients. To promote partnership in outsourced public extension management: 0 Supervision missions visited outsourced projects; Cashew trees were replaced and the number of cashew trees increased in new plantations using improved techniques and materials. A technical assistance programme was prepared for the General Union of Co- operatives cashew nut processing unit; 0 900,000 cashew saplings were produced and distributed to the family and private sectors; Under the ambit of the plan to contain diseases with a significant economic impact and the biological control programme for maize and cassava diseases, the following activities were implemented: A national strategy was formulated for controlling the principal diseases in cereals; warning bulletins were produced and analyses made of vulnerability and the principal causes of disease; 0 Post-harvest conservation methods and technologies were disseminated (improved granaries and use of chemical products);  - 63 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 0 The incidence of greenfly in mandioca and Brown Streak Disease was assessed countrywide with the exception of Tete, Maputo, Niassa and Manica provinces; 43 surveillance brigades for diseased plants (palm trees) were created in villages in the districts of Chinde, Inhassunge, Nicoadala, Namacurra and Maganja da Costa. Attention was given to 31,627 diseased palm trees belonging to 1339 families. Approximately 4000 stocked fish tanks were installed: 1251 in Manica, 94 in Tete, 18 in Nampula, 1510 in Zambezia and 47 in Sofala, benefiting approximately 2000 families. The following activities were implemented to support citrus and mango production through outscourced contracts in Nampula, Zambezia and Maputo provinces: 0 A nursery was installed in Boane and approximately 40,000 plants were distributed to the school and communities; 154 silos were installed in the provinces of Sofala, Manica and Cab0 Delgado and 924 granaries in every province except Maputo and Gaza; Under the ambit of livestock repopulation and land management: Approximately 110 cattle were distributed to the family sector in the districts of Massingir, Guija, Chibuto and Mabalane; 10 rams were acquired for distribution to the Napaha (Montepuez) Livestock Support Posts, the Mapupula Agrarian Station and the Pemba/Metuge Agrarian Training Centre; 0 A capacity building course was conducted for 46 subsistence farmers and preparations made for the chemical treatment campaign against cashew mildew (oidium) in Manjacaze, Xai-xai and Chibuto districts. B. INFRASTRUC,TURE The principal actions in the area of public works and habitation was to make roads passable, promote housing, improve public health by increasing access to drinkable ,water and improve the rural and urban sanitation system, thus contributing directly to the reduction of absolute poverty.  - 64 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 A part of the road rehabilitation and maintenance programme was implemented; primary, secondary and tertiary roads were rehabilitated; metal bridges were constructed and periodical and routine road maintenance was carried out. The execution level of sectoral targets was good compared with 2003, as presented in the table below: Table: Road Rehabilitationand Maintenance (in Kms and percentage execution of the Sectoral Plan) 2002 2003 2004 Executed I %Plan I Executed I %Wan IExecuted 1 %Plan Source:MOPH - National EconomicDirectorate.2004. The principal activities conducted in 2004 were as follows: the conclusion of EN8 (National Highway 8) Nampula/Nacala; the continuation of rehabilitation work on EN1 (Manhiqa/lncoluane, Maxixe/ER520/ENI intersection and the ER520/ENI intersectionNilanculos); EN242 LitundeKabo Delgado border; EN223 Mussacama/Calomue; EN206/Chibut0 and EN215 Gorongosa/Maringue/Chemba. Rehabilitation work began on the EN1 between Maputo and Marracuene. Periodic maintenance work continued on the EN1 (MarracueneIManhiqa; Incoluane/Zandamela; Zandamela/Maxixe). Work on the EN208 ChongoenelChibuto is almost complete. The UmbelQzi bridge was completed as part of the programme to rehabilitate and construct 7 metal bridges. Under the ambit of emergency repair work on infrastructure damaged by the 2003 rains, work began to repair the Milange/Maginge road in Zambezia province. The initial road repair plan for the EN7 had to be altered due to the rapid degradation of certain roads after the repair budget had been allocated. Emergency work was carried out on Munhiba/Milange, EN226 Malei/Maganja da Costa; EN230/ER458 between Maganja da CostaIPebane; ER471 Namacurra/Macuse and ER496 Mopeia/Luabo. The following roads were withdrawn from the annual plan: ER417: Namacurra/Macuse and EN230/ER485 between Maganja da Costa/Pebane. The budgeted resources for these roads were reallocated to the most critical stretches.  - 65 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 The initial engineering plan was completed for the construction of the Caia bridge over the Zambeze River and the plans for the rural rehabilitation of the following roads was completed: BenelFingoe, Nametil/EN239/260 intersection, Maputo province border/ Chokwe, MecontaKorrane and EstimalMagoe. Work continued on the Engineering plans for rehabilitation work on the following roads: Estima/Magoe, Meconta/Coreane, Maputo border/ Chokwe, Nametil/EN239/260 intersection and BenelFingoe. Engineering projects were prepared for periodical maintenance work on the following roads: Inharime/Panda, Catuane/EN202, Macarretane/Chicualacuala,Jatingue/Manjacaze and Cuamba/Marrupa. The Mozambican Government financed the planning phase of the above projects and construction and inspection work on the road between Namacurra and Ligonha River in Zambezia province was put out to tender. The road was divided into three lots: Lot 1 (Namacurra/Nampevo) of about 152 kms, Lot 2 (Nampevo/Alto Molocue) of about 117 kms and Lot 3 (Alto Molocuel Ligonha River) of about 106 kms. One of the Government's main strategies for improving the population's standard of living is to increase access to drinkable water. The central objectives of PARPA's water component are as follows: to promote sustainable water use and increase the low-cost supply of drinkable water and sanitation in urban areas. To attain the first objective, the PISMA project (Environmental Monitoring System Installation Project) was implemented to install 22 telemetric stations in the Zambeze, Licungo, Pungoe, Birzi and Save basins and a telemetric network in the Limpopo basin. 30 hydro-climatological stations were rehabilitated, 4 of which were pluviometric and 26 hydrometric. An agreement was ratified to establish the Zambezi Watercourse Commission (ZAMCOM) for the co-ordinated use of water resources by the States sharing the Zambezi basin. The IncoMaputo Agreement and the Limpopo Basin Commission (LimpCom) were both ratified by Mozambique in 2004. The first phase of the Joint Study Maputo Basin Study was completed in November 2004 (the European Union has already made funds available for the second more comprehensive phase). Work continued on the Joint Umbeluzi Basin Study which should be completed in the first quarter of 2005. The preparatory phase of the Zambezi Basin Study is in progress. A Rovuma Basin Development Initiative is being prepared and discussions were held with Tanzania about establishing a Joint Commission for the Rovuma Basin Study. Mozambique participated in the African Minsterial Council on Water (AMCOW) in its role as a member of the Advisory Committee. The following studies were conducted in the following sub-components to support the preparation of the National Water Resource Management Strategy: Water Policy and Law revision; developing institutional capacity and human resources;  - 66 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 information and knowledge about water; Water Resource development; national economy, investments and finances and water and environmental Issues. The studies have all been completed except the first (Water Policy and Law revision) which is expected to be finished in 2005. In the area of increasing the supply of drinkable water and providing low cost sanitation in rural and urban areas, PARPA 2001-2005 set the aim of increasing water supply coverage to urban and periurban communities to 50%. Actions to attain this aim include rehabilitating water supply systems, reducing losses and stimulating local infrastructure management. Rural water coverage should be inceased to 40% in 2004 to reach 6 million people, particularly in Zambezia, Nampula and Niassa provinces. To attain these goals, 878 water sources were built or rehabilitated in rural areas, including 116 new wells, 403 new boreholes, 355 rehabilitated water sources and 4 springs, benefiting approximately 439,000 families. The rural water supply coverage rate is presently 43.2% and the total percentage of the population with access to drinkable water has been raised to 41%. The table below shows that there was an increase in availability of water sources in some provinces such as Niassa, Sofala, Inhambane, Gaza and Maputo, providing a better coverage rate than previous years. Although efforts have been made in Nampula and Zambezia provinces, coverage rates are still lower than average due to high population growth. Rural Water Supply Programme Province 2001 2002 2003 2004 Sources ICov.(%) ISourcesICov.(%) Sources COR(%) Planned I 1 I Sources Cox(%) I Niassa 118 40.7 126 44.2 211 60.0 225.0 147 60.0 Cab0 163 48.0 94 48.3 59 53.8 51.2 Delgado 114.0 74 Nampula 62 15.1 107 16.6 74 17.1 215.0 92 20.6 Zambezia 103 20.4 272 22.7 229 22.8 395.0 37 25.6 Tete 74 47.3 126 47.2 103 42.4 122.0 92 48.2 Manica 59 48.3 33 45.2 45 52.8 60.0 11 49.1 Sofala 144 53.2 107 57.2 84 69.0 55.0 86 69.0 Inhambane 150 24.1 169 28.7 299 37.6 255.0 240 66.0 Gaza 145 65.3 30 64.5 36 67.1 65$0 14 59.2 Maputo 153 65.8 38 58.8 64 63.0 35.0 85 98.6 Total 1 1171 I 35.0 I 1102 I 36.3 11204 139.4 I1541 1 878 43.2 1 Source: MOPH, PES Evaluation Report 2003  - 67 - ECONOMICAND SOCIAL PLAN EVALUATION2004 The water supply coverage rate in 15 urban centres (Pemba, Lichinga, Nampula, Nacala, Quelimane, Tete, Chimoio, Dondo, Beira, Inhambane, Maxixe, Xai-Xai, Chokwe, Maputo and Matola)was 36.8%. Regarding basic sanitation coverage, 35% of the total population had access to sanitation services in 2004. In the area of urban sanitation, activities focused on the Beira sanitation system rehabilitation project. The executive plan is being prepared for rehabilitating the sanitation network and building a sewage treatment plant for the city. The financing agreement for the Four Cities Project was signed with the African Development Bank and efforts are presently being made to meet the pre- conditions for implementation. The Evaluation Report has been approved for contracting consultantsto preparethe Four Cities Project executive plan. A credit agreement has been signed with the Afican Development Bank to finance work in Xai-Xai, Chokwe, Inhambane and Maxixe. Studies have also been completed for preparing strategic plans for Mozambique's seven municipalities . Of the 27,000 improved latrines planned for rural areas in 2004, only 9287 were built (a 36% execution rate). Work continued to reactivate the rural sanitation nuclei in Manica, Tete, Zambezia and Cab0 Delgado provinces with the training of animators and activists in rural communities and the construction of improved traditional latrines and improved latrines. The main activities in the energy sector in 2004 were as follows: Promotionof the Mephanda Nkuwa hydroelectric project; Approval of fiscal legislation for oil-producing operations (Law 19/04 of 2nd June); Conclusion of work to electrify the district administrative centres of N'gauma, Majune, Chicualacuala and Guro. Work is in progress to electrify the district centres of Chigubo, Muidumbe, Pemba-Metuge and Muanza; Conclusion of work to install electricity networks in the Larde, Chimbomila, Mucumbura,Luaboand Mapinhaneadministrative posts ; Reconstructionof the Nampula/Nacala 11OkV transport line and completion of work to connect Cuamba city to the national electricitynetwork; The electricity network was extended to Massingir, Zandamela, Quissico, Inharrime, Chissibuca, Mavila, Morrumbene, Massinga, Morrungulo, Caia, Inhamitanga, Inhaminga, Chupanga, Marromeu, Changara, Mucumbura, Matambo, Catandica, Macossa, Namacurra, Maganja da Costa, Inhassunge, Moma, Murrupula and Malema, among others.  - 68 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 C. FISHERIES Actions planned for 2004 aimed to increase the revenue of the small-scale fishery, promote semi-industrial fishing, increase the economic contribution of the industrial fishery, raise the production capacity of aquaculture and improve the efficiency of public administration to stimulate sector development. In this context, the main actions implemented in 2004 were as follows: a To improve the living conditions of fishing communities, extension activities were implemented to demonstrate the use of outboard motors and training was provided in new fish handling, processing and conservation techniques; a Information continued to be updated about the main indicators from the small-scale fishery national census; a Associations were promoted by animating groups and association managers; a Under the ambit of integrated community development projects, schools, health centres and drinking water sources were built, roads were improved and plans were made to build landing stages and fish trading infrastructure in Cab0 Delgado, Nampula, Sofala and Maputo; a Saving and credit activities were promoted among small-scale fishermen: three micro-finance institutions offering Rotating Savings and Credit schemes were contracted in Zambezia, Sofala and Nampula provinces and capacity building activities were conducted for personnel and beneficiary groups; a The Beira and Angoche fishing ports are being rehabilitated and the projects incorporated into the BADEA financing package; a The fishing facilities in Nova Chicoa were rehabilitated to improve the co- ordination of fishing activities in the area; a Initial demonstrations were made of the use of TED apparatus before compulsory implementation begins in January 2005; a Training was provided for implementing new pisciculture techniques on an experimental basis. Micro-credit was made available for aquaculture in Macanga (Tete); a Approximately 1757 fish breeding tanks were installed involving approximately 1063 families; a Hygiene was improved in fish processing and production units and inspection capacity was brought up to international standards. Export markets were secured for aquaculture products;  - 69 - ECONOMICAND SOCIAL PLAN EVALUATION2004 The state of the shrimp resource on the Sofala Bank was monitored and assessed, and the gamba fishery was assessed; Line fishing continued to be monitored in the southern and northern regions of the Save River and the expansion of the fishing fleet in the same regionwas monitored; Under the ambit of supporting aquaculture development, trials were conducted for establishing a micro-algae culture laboratory at the Fisheries Research Institute; Preparations are in progress for introducing a satellite monitoring system for the fishing fleet. The pilot phase has been completed and equipment is being installedfor the rest of the fleet; New taxes are being approved for the fishing industry with the objective of recovering some of the inspectionand catch certification costs; 5 employees received training in Change Management; Work continued of mapping all the fishing ports and formalising the issue of titles for land use; A Research Vessel began operating on the Cahora Bassa reservoir and a delegation of the Fisheries Research Institutewas opened. A new Fisheries Inspection Laboratory and Provincial Fisheries Directorateoffices were established in Quelimane; Courses at the Fisheries School were restructured to ensure that training meets the real needs of the sector's business community; Negotiations are continuing to formulate new co-operation terms with Russia and the Seychelles. Negotiations to establish a Fisheries Commission for the Southwestern region of the Indian Ocean (SWIOFC) and the terms of the Southern Indian Ocean FishingAccord (SIOFA) are nearing completion; D. MINERAL RESOURCES This sector implemented actions to increase production and reduce poverty by supporting mining activities, strengthening mine inspection and increasing the population'saccess to energy sources. a Geological prospecting and research was conducted in selected areas of Espungabera-Manice and Geological mapping of Greenstones was conducted inthe northernprovinces. Specific activities included: o Preparinga preliminaryreporton Cab0 Delgado province;  - 70 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 o Completing the revision of the final geological report on Gorongosa and Espungabera; o Compiling a report on areas of Moatize, Changara and Cahora Bassa in Tete province; o Concluding the revision and correction of geological maps, collecting rock, geochemical and photogeological samples and locating observation points; o Preparing an Occurrence Chart for Gold and potential areas for detailed work in gold prospectingand research; o Concludingthe Mineral Occurrence Chart and the respectivechart of areas selected for more detailed work in the N'g8o region; o Continuation of work to compile Mineral Occurrence Charts, Paragenetic Tendencies Charts and Selected Areas Charts for more detailed work in Cobue, Lupilichi and M'papa regions; The following activities were implemented under the ambit of reactivating the tantalum mineral mining projects in Muiane: 0 Mining concessions in Muiane were attributed to the company ITM Mining; The economic viability study was approved for expanding the capacity of the treatment plant to 40 tonnedhour. The following work was done to complete and computerise the Mining Register and incorporate it into the system linking the Provincial Directorates and Central Government: The Mining Register was computerised at central level and a data base (ARC-GIs) was designed and integratedinto Registeringunits; 0 Four provinces (Manica, Tete, Zambezia and Nampula) were identified for establishing regional Mining Registry Departments. Offices were rehabilitated and equipped for this purpose and employees were selected and trained. 0 The record of high concentration points in the country's geodesic network was updated and expanded; 0 The CD was edited, converting the coordinates between the national map and GPS; 0 Pilot centres were established in Nampula,Zambezia and Niassa. The following activities were implemented under the ambit of preparing and updating the Mine Law regulations (environmental and technical safety regulations for open and underground mines):  - 71 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 0 Council of Ministers Approval for Environmental regulations for miningactivities; 0 The environmental impact study was concluded for opening the Chibuto-Chongoene road and the Cais Bridge in Chongoene as part of the Chibuto Heavy Sand project; 0 The financing contract for the Moma Heavy Sand project was signed by all the financing banks in Dublin, Ireland. The construction contract for the Moma installation was signed and the foundation stone laid; 0 Surveys were conducted for the Moebase Heavy Sand project and additional international market studies carried out. E. MANUFACTURINGINDUSTRY Specific objectives for 2004 in this sector were to promote the graphics and chemical industries and small and medium enterprises; to expand the business network and increase exports. The principal actions during the year were as follows: Diagnostic studies were conducted of the Graphics and Chemical industries with a view to preparing strategies for these subsectors; Diagnostic studies were conducted into the present state of affairs of small and medium enterprises and a development strategy is currently being prepared; The Advertising Code was approved and is currently being disseminated; Terms of Reference were drawn up for preparing the strategies of the Metallomechanic, Copra, Textile and Clothing sectors; Detailed Terms of Reference were drawn up for preparing the National Quality Control System and a consultant was selected; The Quality Control Policy and Strategy are currently being implemented through a range of activities under the ambit of the National Quality Control System; The Quality Control Documentation and information Centre is currently being rehabilitated; The Institute of Industrial Property was established and its activities disseminated at provincial level to business people and civil society. The Industrial Property Code is presently under revision;  - 72 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 8 Preferential access mechanisms to external markets were studied and disseminated at provincial level. The working group on external markets recieved technical training to improve its capacity to monitor and evaluate business opportunites in these markets; The strategy was completed for developing national Wood Product exports; Regular international information on prices and markets is now available on community radio. Information about national and international agricultural markets is also available in the monthly publication '0 INFOCOM'; Implementation of the Credit Facilities Programme for rural business is being monitored; 8 Instructional inspections are being conducted in commercial and industrial establishments in every province; The National Metrological Laboritary is presently being established; The Malonda project provided financing for a number of commercial operations in several provinces; 8 The proposal for revising the Business Licensing Law (Decree 49.04 of 17th November) was approved by the Council of Ministers; 8 Decree no. 43/98 of 9th September concerning industrial and commercial inspection was repealed. F. TOURISM The principal objectives of the Tourism Sector for 2004 were as follows: to promote cultural and natural heritage; to formulate a Marketing strategy promoting the image of Mozambique; disseminate information about tourist destinations and promote conservation areas, particularly the cross-border parks in an effort to attract investment and diversify the types of tourism on offer. The principal activities in these areas were as follows: 8 Parilamentary approval of the Tourism Law, with a view to establishing a legal framework consonant with the present level of demand and regional and international standards; 8 Approval by the Council of Ministers of the Strategic Plan for Tourism Development 2004 - 2013; 8 Preparation of the Marketing Strategy Proposal for the Tourist sector;  - 73 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 0 Decentralisation of budgetary planning and management of the Parks and Reserves to the Provincial Directorates of Tourism; 0 Promoting investment opportunities in Mozambique in Malasia and Portugal and at the Maputo Tourism Fair; 0 Signing Memoranda of Understanding with various State and international institutions to strengthen institutional capacity, particularly in the area of conservation; 0 A Seminar was conducted on Investment in Tourism in Mozambique and the Maputo Tourism Fair was held in Maputo from 12th to 16th May 2004; 0 Contractors were invited to submit tenders for building the Giryondo Border Post, under the ambit of the Limpopo cross-border development project; 0 A seminar was held to disseminate the land use plan for the areas connecting the Grand Limpopo Cross-Border Park. These areas cover five districts: Chigubo, Massangena, Chicualalcuala, Mabalane and Massingir; 0 The Action Plan proposal for the Tourism Sector in Africa was approved under the ambit of NEPAD; 0 A workshop was held to revise the Strategic Plan for the Development of the Grand Limpopo Cross-Border Park; 0 The 29th Session of the SADC Wildlife Technical Committee was held in Maputo; 0 50 buffaloes were reintroduced into the Limpopo National Park as part of the wildlife restocking process; 0 The Carr Foundation signed a memorandum of intention to provide financial support for the development of the Gorongosa National Park; 0 A financing agreement was signed with AFD for the Quirimbas National Park. G. TRANSPORT AND COMMUNICATIONS The measures planned for 2004 in this sector focused on improving infrastructure to stimulate growth and development at national and regional level; expanding and modernising the meteorological system to improve the safety of sea and air transport and reducing transport costs to increase the competitiveness of national products. The principal activities implemented during 2004 included the following:  - 74 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 Sea, River and Lake Transport The INAMAR statute was approved by Decree n032/2004of 18th August and internal regulations are presently being prepared; Consultations with the Ministry of Health are in progress concerning amateur diving regulations; Access channels in the principal ports (Maputo, Beira and Quelimane) were monitored and the channels to Beira and Quelimane ports have been dredged; A new lighthouse has been built; New nautical charts are being prepared for the ports of Quelimane, Beira and Angoche; The dimensions of Maputo bay have been calculated; A plan and schedule are being prepared for the study into the navigability of the Zambezi River; A hydrographic and demarcation survey has been completed for the ports of lnhambane and Angoche; Road Safety The vehicle registration system is being computerised and a new style of driving licence is being introduced. Construction work is in progress at the compulsory traffic inspection centres; Legislation has been prepared to prohibit the import and sale of left-hand drive vehicles; A first draft of the Manual for the driving instructors' course has been prepared. Accident black spots have been identified; A document is being prepared with a view to formulating a global strategy for reducing road accidents countrywide; 0 The Highway Code has been updated. 0 Provincial road safety sectors are being reorganised and qualified personnel are being appointed; 0 A global compulsory car insurance strategy is being formulated; 0 Road inspections have been conducted countrywide and efforts are being made to control nocturnal traffic; 0 Alchohol testing for drivers was monitored in every province;  - 75 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 0 The process of standardising road signs is in progress in accordance with SADC directives; Road Transport 0 Work is in progress to discourage the licencing of inter-provincial and international public transport vehicles with fewer than 25 seats; 0 Parliament approved the Compulsory Insurance Law (Law no. 2/2003) requiring insurance for all vehicles. The use of alcoholometers was officially introduced on 19th December 2003; Civil Aviation 1. Airports 0 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; 0 Decree 50/96 was revised regarding the sale of air traffic documents; 0 Technical aeronautical regulations (MOZ-CATS and MOZ-CARS)were created regarding air personnel, training, airport infrastructure and flight operations; 0 The Lichinga Airport was certified as an International Airport; 0 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; 0 The lnhambane and Nacala routes have been opened to all national air operators; 2. Safety Activities are in progress to inspect and certify aeronautical equipment and materials; The licencing process is being computerised; 0 Regulations are being approved concerning microlight aircraft and medical evacuations; A computerised examination room is being established; Communications 1. Telecommunications  - 76 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 0 A pre-payment card was launched. Elements of the product marketing mix were identified; 0 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; 0 Tarrifs for service use were revised; 0 Legislation was prepared for creating a Universal Service Fund; 0 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; 2. Mozambican Postal Service 0 A strategy for developing the postal sector is being prepared; 0 A Universal Service Law is being prepared. Ports and Railways 0 The rehabilitation of the Dondo/Muanza line is nearing conclusion; 0 A contract is being signed with the winner of the international bidding process for the Beira Railway concession for a period of 25 years; 0 15,210 sleepers were laid on the Cuamba/Lichinga line and 7021 on the Cuamba/Entrelagos line; 0 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, Gurue, Furancungo, Nicole, Cobue, Mecula and Mueda are nearing completion; 0 Trials of automatic synoptic stations have been conducted in Zitundo, Combomune, Funhalouro, Changara, Fingoe, Morrumbala, Muite and Moma.  - 77 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 V.3. GOOD GOVERNANCE, LEGALITY, JUSTICE AND DECENTRALISATION 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. This section presents the principal activities implemented in each of these areas. It describes activities implemented under the ambit of the Technical Unit's Public Sector Reform Plan and also the routine activities implemented in other institutions which contribute towards the same objectives. In the area of decentralisation, PARPA's principal objective is to transfer greater authority to and raise the capacity of Local Government at district and provincial levels. During 2004, principal activities were: 0 Preparing a bill for the revision of Law 8/2003 of 19th May concerning Local State Organs; 0 Approval of the Ministerial Decree n080/2004 concerning links between Local Governmental Organisations and Community Authorities. In the area of professionalising the civil service and modernising administration to improve the quality of seyice to the citizen, 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), Cab0 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. The following activities were conducted by the Ministry of State Administration:  - 78 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 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 Cab0 Delgado provinces; 0 The process of establishing Public Service 'One Stop Shops' (BUAPs) was begun; 0 The 4th National Municipality Conference was held; 0 In the area of building and rehabilitating infrastructure, 30 tractors were acquired and distributed in 3 provinces with the aim of equipping and improving the performance of local government, and; 0 Investiture ceremonies were held to install local government authorities (Municipal Assembly, President of Municipal Assembly and Municipal Council) after the second local government elections. The main objective in the area of monitoring and evaluating PARPA was to improve co-ordination in the short- and medium-term between the PES, PARPA and CFMP. The Ministry of Planning and Finance prepared a new CFMP plan which was incorporated into PES and State Budget 2005 methodology. In the area of improving financial management and financial reporting, emphasis was given to e-SISTAFE implementation, the reform of State procurement, tax reform and strengthening internal and external auditing. With regard to reforms towards strengthening financial planning and budgeting systems, work is in progress with the sectors to establish the methodology for preparing the 2006 State Budget. In the area of Tax Reform, the 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 has already been formulated to improve the transparency and efficiency of the procurement system. This will be considered for approval in the first quarter of 2005. A General Accountancy Plan was prepared under the ambit of strengthening internal and external auditing. Regulations concerning the auditing and monitoring process are being prepared. The Attorney General's office put the task of conducting a forensic audit of Banco Austral out to tender. However, none of the companies operating in Mozambique,  - 79 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 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 the ambit of 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 the area of 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 n015/99). The law will only be discussed in Parliament in 2005 after the respective regulations have been sent to the Council of Ministers in 2005. 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 that the State is responsible for upholding justice between citizens and other social actors, and for maintaining internal public order. If the State is to meet these responsibilities, thorough reform, capacity building activities and other improvements need to be implemented in the legal, judicial and public order systems. The following actions were conducted in the Justice sector to ensure good governance, legality and justice: Justice Sector Reform: 0 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 in the area of Justice Sector Reform include: - The more effective use of Integrated Strategic Plan monitoring matrices in the Ministry of Justice; - A joint planning exercise in the Justice sector; - The preparation of planning software for the Ministry of Justice;  - 8 0 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 Traininq to improve Professional performance: 0 41 judicial magistrates trained in land, environment, forestry and wildlife law (68% execution); lnitital 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); 0 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. Increasing access to iustice for all: Preparatory activities and activity planning are in progress to formulate the Community Tribunal Law. Legal Reform: 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; 0 The proposal for the reform of the Commercial Registration Code was prepared and delivered to CIREL and subsequently dispached to Parliament; 0 The preliminary report on the Public Notary Code was completed and submitted to CIREL.  - 81 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 Constructins and Rehabilitatinq Infrastructure: 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 dispached to the Ministry of Public Works and Habitation for approval. lnvetment in Registry and Notary Services: 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. In the area of Public Order, one of the priority objectives was to build Police capacity to prevent and investigate crime. In 2004 the following activities were conducted: 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 SaveAnhambane Administrative Post. Rehabilitation work is in progress at the Niassa Provincial Migraton Office; the District Police Headquarters at Angonia (Tete), Nhamatanda (Sofala) and Moamba (Maputo); a Police Training Centre at Matalane and cells at the Maputo City Police Headquarters; 0 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.  - 82 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 V.4. EXTERNAL RELATIONS AND DEFENCE The main activities under the ambit of the External Relations component of PES were as follows: In the context of implementinq the decisons of the 2nd African Union Conference held in Maputo (under Mozambican presidencv): the Pan- African Parliament and the Peace and Security Council of the AU were launched on 18th March and 25th May 2004 in co-ordination with the African Union Commission; Under the ambit of working towards peace, stabilitv and security in Africa, Mozambique closely monitored the development of the political situation in southern Africa and efforts made towards peace and stability in the region and continent as a whole. The reestablishment of constitutional order after the coups in S%oTome and Principe and Guinea Bissau is a sign of Mozambique's commitment in this area; Since June Ist, Mozambican personnel have been involved in the African Union Peace Operation in Burundi. At the request of the United Nations, preparations are being made to increase the Mozambican military contingent by 850 men. Mozambique worked with the Bush administration to normalise relations with Libia, resulting in increased rapprochement between the two countries; After consulting with Member States about the relevance of an Agriculture and Water Summit, Mozambique convened the Extraordinary Sirte Summit. The Declaration regarding the Challenges of Implementing the Integrated and Sustainable Agriculture and Water Development Plans in Africa was approved; the Solemn Declaration regarding the Common African Defence and Security Policy was signed and the African Rapid Responce Force and the Early Warning Mechanism were approved. An Advisory Panel was also approved to advise the AU Commission on issues of peace and security. In the context of stimulating NEPAD implementation, the NEPAD Partnership Review Mechanism was launched in Kigali, Rwanda, of which Mozambique is one of the 17 founder members. The Panel of Distinguished Personalities that will implement this mechanism was also established. SADC's Strategic Regional Developent Plan was officially launched.  - 83 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 Three major internationalevents were held in Mozambiquein 2004: The 10th Summit of Heads of State and Government of the NEPAD Implementation Committee, from 23rd May 2004. Principal issues discussed were as follows: The need to highlight the importance of the NEPAD Partnership Review Mechanism as a means of demonstrating Africa's commitment to NEPAD; The importance of agriculture in eradicating poverty on the African continent. FA0 made funds available to accelerate the implementation of the Comprehensive African Agriculture Development Plan (CAADP); The need to implement NEPAD infrastructure projects in which regional business communities play a central role; The launch of the document 'Guidelines for preparing NEPAD infrastructure projects' to facilitate the preparation of NEPAD projects, encouraging the participation of public and private investors; The need for Great Britain to create an African Commission to focus on African issues; The 'NEPAD Council' initiative was discussed: a group created by young African academics based in the United States with the aim of providing intellectual support for NEPAD implementation. African Economic Summit The African Economic Summit took place from 2nd to 4th June 2004 with the aim of capitalizing on the best practices and experiences for African development. The Forum agreed on the following issues: The need to create an environment in Africa to attract foreign investment; The need for foreign investors to make decisions that are compatible with the legal and economic systems, institutions, policies and ownership rights existing in the respective African countries; 0 The need for south-south partnership to implement a compelling development agenda between southern nations; The importance of the Water Project, aiming to provide access to safe water sources for 60% of the urban population. The Forum also agreed on the need to create partnerships to implement the UN Millennium Goal of providing drinking water and sanitation to 70% of the population by 2015;  - 84 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 0 Using NEPAD as a key to implement large projects and attract the necessary investment capital (for example, Mozal in Mozambique); Summit of Heads of State and Government of the ACP Group The Summit was held from the 21st to 24th June 2004 under the slogan 'Forging Our Future Together'. At the end of the Summit the Heads of State and Government adopted a final declaration (the Maputo Declaration) and six decisions concerning issues of common interest to the ACP Group and in response to the current international situation: (i) Peace, Security and Stability; (ii) Millennium Development Goals; (iii) Intra-ACP Relations; (iv) ACP-EU Relations; (v) Partnership Accord Negotiations between the ACP group and the EU; (vi) Negotiations with the World Business Organisation. In addition, the Summit adopted a resolution requesting the EU to honour its legal and political commitments concerning the trade in sugar. The donor community is willing to continue its demining activities in affected countries and to focus attention on the most vulnerable communities living in mined areas. Mozambique's role in international events has been to link the mining process to development issues; Mozambique is implementing the Ottowa Convention directives banning the use of anti-personnel mines. However, Mozambique urgently needs to bring national legislation into force to ban the use of these mines by individuals and organisations; 0 The annual demining conference was held on 26th February 2004 with humanitarian and commercial demining operators in the country, co- operation partners in the demining sector, central and provincial government representatives and senior IND personnel. The main objective of the conference was to assess the execution of the 2003 demining priority plan and discuss and approve the plan for 2004. 0 The National Humanitarian Demining Norms were distributed to demining operators countrywide. The National Demining Institute is translating the document from English into Portuguese, making the Norms accessible to operators. The Portuguese version should be available in August 2004. The Administrative Tribunal has nearly completed its surveys prior to rehabilitating the Maratane Refugee Accommodation Centre in Nampula Province. Work is expected to begin in the second half of 2004;  - 85 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 0 The first tripartite agreement for the voluntary repatriation of Rwandan refugees was signed by delegations from the Mozambican and Rwandan Governments and the United Nations High Commission for Refugees (UNHCR) for the repatriation of approximately 1000 Rwandans. The agreement includes internal procedures for voluntary repatriation, registration and documentation and methods of verifying refugees and asylum seekers who have already registered for repatriation. All potential repatriates are presently being registered and assessed. The second tripartite agreement is due to be signed on 20th September 2004 in Maputo, setting a schedule for the repatriation process. A data base is already operating, although an internet link still needs to be established between the INAR headquarters in Maputo and its provincial delegation in Nampula;. An identity card for asylum seekers has been designed and three regional seminars (southern, central and northern zones) are being organised to disseminate it; In the area of disaster management, the process of mapping areas vulnerable to disasters is in progress in co-ordination with a number of research institutions. The following actions have been implemented to date: 0 Production of a Limpopo Basin Atlas in co-ordination with Fews-Net and UEM; 0 Risk mapping in the River Buzi Basin in co-ordination with GTZ and the Catholic University of Mozambique. The following activities are in progress: o Preparation of disaster profiles; o Preparation of an evacuation route model for different types of disasters, to be implemented in the high-risk zones in co-ordination with local administrators. Mozambique worked with other SADC countries to create disaster management mechanisms, such as the creation of the Disaster Management Committee. Mozambique is involved in sharing information about floods, droughts, cyclones and other disasters. Joint management organs were created for the hydrographic basins. The study of Government Policy regarding NGOs was completed; The following seminars were held under the ambit of the human resource deveIopment project: 0 Awareness raising, involving SADC social communication organs;  - 86 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 A seminar on information flow with Disaster Management Technical Council members and representatives from Malawi, Zambia and Zimbabwe; A seminar on the role of social communication organs in raising awareness, involvingjournalists from Lesotho, Malawi and Zambia. Under the ambit of updatingagreements and protocols: Participation in negotiating, preparing and adopting treaties in the areas of human rights, crime prevention, criminal justice and international tribunals; Paricipation in regional negotiations about the use of international rivers; Formalisation of the Inter-ministerial Commission to Combat Transnational Organised Crime and Commissions for Crime Prevention and Criminal Justice; Formalisation of a central authority to receive requests for reciprocal legal aid under the ambit of the United Nations Convention on Organised Transnational Crime and its three protocols; Preparations began for Mozambique's ratification of the Rome Resolution to set up an International Penal Court; 6 new NGOs were authorised; 8 others are presently in the process of being registered and 11 have been authorised to apply for registration; A draft Agreement was prepared between Mozambique and Santa - Se to regularise relations between the two parties and to establish the Church's juridical statute. The draft now needs to be discussed. Various legal instruments were approved under the ambit of Bilateral Co- operation: Memorandum of Understanding was signed regarding the Initiative for the Development of Electricity in the North of Mozambique (South Africa); Agreement for the abolition of visas for carriers of diplomatic and military passports (South Africa); Co-operation Personnel Agreement with Benin, Sudan and Mauritius; Co-operation Agreement (Benin, Suds0 e Mauricias); Co-operation Agreement with Ministries of Foreign Affairs (Benin, Sudan); Economic, Scientific and Technical/CuItural Co-operation Agreement and the creation of the Mixed Co-operation Commission (Benin); Commercial Agreement (Zimbabwe); Road Transport Services Agreement (Zimbabwe);  - 87 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 Security and Public Order Co-operation Agreement (Mauritius); Co-operation Agreement in the area of reducing the demand for drugs, and preventing illegal trafficking of narcotics (Mauritius); Opening of the Mozambican High Commission in Botswana/SADC; Approval by the Irish Government in March 2004 of the Country Strategy Paper (CSP) for 2004-2006, prioritising Irish support to the Education, Health and Agriculture Sectors, combating HIV/AIDS, the State Budget, Public Sector Reform, Governance and Provincial Programmes in Niassa and Inhambane. Three Memoranda of Understanding was signed with Canada regarding the country's contribution to the Common Fund for Health (PROSAUDE); support for the National Council to Combat AIDS and support for the Common Fund Flow Mechanism of the National Agrarian Development Programme (PROAGRI); A survey was conducted by the Canadian International Development Agency (CIDA) in the provinces of Cab0 Delgado, lnhambane and Maputo concerning the Canada & Mozambique Country Development Programming Framework (CDPF), culminating in the signing of an agreement in May between the two countries. Through the CDPF, Canada plans to allocate 50 million Canadian Dollars a year in five principal areas of intervention: education, agriculture, rural development, HIV/AIDS and good governance. USA authorised financial support to Mozambique through the USA President's Emergency Plan for HIV/AIDS Relief (PEPFAR) on January 20th 2004 through Amendment no. 1 of the HlVlAIDS Programme. The objective of the Amendment is to support Government strategies for preventing HIV/AIDS transmission in Mozambique. The global objectives of PEPFAR are to prevent approximately 7 million new HIV/AIDS transmissions; treat approximately 2 million people infected by HIV/AIDS and provide care for approximately 10 million people affected by HIV/AIDs including AIDS orphans and vulnerable children. USAID signed 4 amendments formalising additional support in the areas of health, governance, rural development, business and investments; A Budgetary Support Agreement was signed with Germany and Sweden; An Agreement was signed for 13 million USD for the electrification of Tete, Sofala and Manica; An Agreement was signed with Sweden to provide 700,000 USD for road rehabilitation in Zambezia and Sofala provinces; A Financing Agreement for HIV/AIDS was signed with Sweden to the value of 600,000 USD;  - 88 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 On 15th April 2004 a Memorandum of Understanding was signed between the Mozambican Ministry of Fisheries and the Cuban Ministry of Industrial Fisheries regarding co-operation in 7 areas of activity: Small-Scale Fishery Development; Professional Training; AquacuIture; Fishery Administration and Regulation; Computing and Statistics; Fishery Research and Business Co- operation; An Agreement was signed with China to donate 30 million Yuan/RMB (30 million USD); An Agreement was signed with Japan under the ambit of the annual Food Aid Programme. Japan disbursed 300 million Yen (approximately 2.6 million USD) during the 2004 financial year; Japan donated 160,000 USD for the combat and prevention of HIV/AIDS in Sofa1a Province; The Japanese Government donated 71,500 mosquito nets treated with long- lasting insecticides to Tete province, for children and pregnant women; In February 2004 a Political Consultation Agreement was signed between the Ministries of Foreign Affairs and Co-operation of Mozambique and Ukraine. Under the ambit of multilateral relations: A new round of negotiations opened between the 44 countries of the Global Business Preference System and multilateral negotiations were resumed in accordance with the Doha agenda. UNCTAD 11 was held in June 2004 in S%oPaulo Brazil. Mozambique bid to host UNCTAD 12 in 2008. In March 2004 the mid-term revision process began for co-operation programmes implemented by UNDP, UNICEF, PMA and UNDAF in Mozambique. The aim of the process is to identify constraints and improve the programmes combating absolute poverty. The UNO Social Economic Council elected Mozambique as a Member of the UNICEF Executive Council for the period 2005-2007; In the CPLP Forum, Agreements regarding the Business Development Centres of Excellence (to be based in Luanda, Angola) and the Public Administration Centres of Excellence (to be based in Mozambique) were signed in May 2004. The Centres are instruments which create the conditions to implement support programmes, providing technical/professional training for small and medium enterprises in public administration management. Mozambique signed a Co-operation Agreement to combat malaria, aimed at stimulating co-operation between States to identify the best method of combating the disease;  - 8 9 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 The 31st OCI Council of Ministers Conference was held in Istambul, Turkey from 14th to 16th June 2004. A resolution was again adopted for providing assistance to Mozambique; In the area of disseminating information about business and investment opportunities, Mozambique featured on the list of the first 16 countries selected to benefit from MCA Funds; The North American State Department communicated that its Government had decided to freeze a proportion of its aid to Mozambique to cover fines for parking consular vehicles in New York and Washington DC, as stipulated in Section 544 of the American Law concering external financing and other programmes financed by the USA; 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'. VI. BUDGETARY POLICY Budgetary policy has focused on attaining the objectives set out in the Government Programme and in the Poverty Reduction Action Plan, namely: maintaining sustainable and inclusive economic and social development; ensuring that public resources are utilized in an increasingly rigorous and rational manner, and; maintaining a sense of social responsibility for implementing the poverty reduction strategy. In this context the State Budget for 2004 expects to receive 17,810.5 billion Meticais in State Revenue: 17,752.5 billion Meticais in current revenue and 58 billion Meticais in capital revenue. Global Expenditure was fixed (excluding financial operations) at 33,602.3 billion Meticais, of which 19,270.2 billion is current and 14,332.1 investment. Financial operations were fixed at 1,691 billion Meticais distributed as follows: deposit operations 1,201.7 billion Meticais and credit operations at 489.3 billion Meticais. The budget deficit stood at 17,482.8 billion Meticais.  - 90 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 Lei Lei CGE RE Piano % do PI8 STATE BUDGET IO' MT - 2003 2004 2003 2004 2005 2003 2004 2005 EXPENDITURE: 30,515 33,740 28,921 32,945 44,932 25.4% 24.0% 28.1% Current Expenditure 16,568 19,270 15,743 19,006 22,605 13.8% 13.8% 14.1% Investment Expenditure 13,912 14,332 12,704 12,880 19,001 11.2% 9.4% 11.9% Net Lending 34 137 474 1,059 3,326 0.4% 0.8% 2.1% FINANCING: 30,515 33,740 28,921 33,167 44,932 25.4% 24.1% 28.1% Revenue 15,359 17,610 14,579 17,071 22,226 12.8% 12.4% 13.9% Donations 11,072 10,948 9,931 10,053 11,547 8.7% 7.3% 7.2% Transf. 8M HlPC 348 329 552 484 368 0.5% 0.4% 0.2% Net External Credit 4,471 4,987 5,081 6,290 7,872 4.5% 4.6% 4.9% Net Internal Credit -735 -335 -1,222 -731 2,919 -1.1% -0.5% 1.8% 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. 14,683 billion Meticais of this total was derived from tax revenue, with taxes on goods and services making the largest contribution. The fall in Tax Revenue was largely due to reduced commercial profits and the fall in the value of the USD and Rand against the Metical, raising the price of imports. I I Lei Lei CGE RE Plano %do PI8 STATE REVENUE IO' MT - 2003 2004 2003 2004 2005 2003 2004 2005 TAX REVENUE 14,191 16,692 13,627 14,683 18,409 12.0% 10.7% 11.5% IncomeTax 3,254 3,860 2,413 3,470 4,694 2.1% 2.5% 2.9% Taxes on Goods and Services 6,921 8.242 6,529 7,753 9,520 5.7% 5.6% 6.0% External Trade Tax 2,165 2,421 2,229 2,284 2,765 2.0% 1.7% 1.7% Other Taxes 1,851 2.169 2,457 1,176 1,430 2.2% 0.9% 0.9% NON-TAX REVENUE 933 787 741 780 1,388 0.7% 0.6% 0.9% ASSiGNED REVENUE 106 274 210 1,290 1,747 0.2% 0.9% 1.1% CAPITAL REVENUE 129 58 0 319 682 0.0% 0.2% 0.4% TOTAL 15,350 17,810 14,579 17,071 22,226 12.8% 12.4% 13.9% The execution of current expenditure (including debt repayments) stood at 19,006 billion Meticais. Execution fell within the current expenditure limits specified in the budget law. Lei Lei CGE RE Piano % do PIE CURRENT EXPENDITURE * IO' MT 2003 2004 2003 2004 2005 2003 2004 2005 Personnel Expenditure 7,579 9,165 7,383 9.195 11.045 6.5% 6.7% 6.9% Goods and Services 3,983 4,193 2,898 3,966 5,308 2.5% 2.9% 3.3% Debt Repayment 1,176 1,228 1,318 1,321 1,284 1.2% 1.0% 0.8% Current Transfers 3,127 3,611 2,945 3,555 4,003 2.6% 2.6% 2.5% Subsidies 176 193 175 208 222 0.2% 0.2% 0.1% Other Current Expenses 535 692 395 761 603 0.3% 0.6% 0.4% Closed Fin. Year 63 120 0 0 0 0.0% 0.0% 0.0% Capital Expenditure 78 66 58 0 0 0.1% 0.0% 0.0% Complementary Period -130 0 524 0 0 0.5% 0.0% 0.0% TOTAL 16,568 19,270 15,743 19,006 22,605 13.8% 13.8% 14.1% TOTAL EXCL. DEBT REPAYMENT 15,392 18,042 14,425 17,685 21,321 12.7% 12.9% 13.3% Capital expenditure currently stands at 12,880 billion Meticais, of which 4,074 billion Meticais is internal expenditure and 8,806 external expenditure,  - 91 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 corresponding to 89.9% of the total planned in the Budget Law. This execution rate can be considered satisfactory compared with the previous year. Lei Lei CGE RE Piano Ohdo PiB INVESTMENT EXPENDITURE 10' MT - 2003 2004 2003 2004 2005 2003 2004 2005 internal Financing 4,129 4,126 3,240 4,074 5,763 2.8% 3.0% 3.6% External Financing 10,655 10,206 8,362 8,606 13,239 7.3% 6.4% 8.3% Donations 7,473 5,422 5,229 7,576 4.8% 3.6% 4.7% Credits 3,028 2,940 3,577 5,662 2.6% 2.6% 3.5% Complementary Period -871 0 1,102 0 0 1.0% 0.0% 0.0% TOTAL f3,9f2 f4,332 12,704 12,880 19,001 11.2% 9.4% 11.9% Global Budgetary Framework The budgetary programme for 2004 approved the raising of around 17,810 billion Meticais in revenue, representing 14% of GDP. The volume of total expenditure including liquid loans was fixed at 33,740 billion Meticais, or 26.8% of GDP. 47% of total expenditure was planned to be financed using external resources. The execution rate of total revenue was 96%, representing a nominal increase compared with 2003. Lei Lei CGE RE Plano %do PIB BUDGETARY FRAMEWORK ios MT - 2003 2004 2003 2004 2005 2003 2004 2005 REVENUE 15,359 17,810 14,579 17,071 22,226 12.8% 12.4% 13.9% CURRENT EXPENDITURE 16,566 19,270 15,743 19,006 22,605 13.8% 13.8% 14.1% CAPITAL EXPENDITURE 13,912 14,332 12,704 12,880 19,001 11.2% 9.4% 11.9% NET LENDING 34 137 474 1,059 3,326 0.4% 0.8% 2.1% OTHER REVENUES (-)/EXPENDITURE(+) 0 0 0 -221 0 0.0% -0.2% 0.0% TOTAL EXPENDITURE 30,481 33,602 28,447 31,686 41,606 25.0% 23.2% 26.0% TOTAL EXPENDITURE iNCL. NET LENDING 30,515 33,740 28,921 32,945 44,932 25.4% 24.0% 28.1% CURRENT BALANCE -1,209 -1,460 -1,164 -1,935 -379 -1.0% -1.4% -0.2% GLOBAL DEF. BEFORE DONATIONS -15,156 -15,929 -14,342 -15,674 -22,706 -12.6% -11.6% -14.2% DONATIONS 17,072 10,948 9,931 10,053 11,547 8.7% 7.3% 7.2% GLOBAL DEFICITAFTER DONATiONS -4,084 -4.981 -4,411 -5,821 -11,159 -3.9% -4.2% -7.0% BMTRANSFER TO HiPC 348 329 552 484 368 0.5% 0.4% 0.2% CREDITS 4,471 4,967 5,081 6,290 7,872 4.5% 4.8% 4.9% Disbursements 5.408 5,745 5,672 6,957 8,692 5.0% 5.1% 5.4% Amortization -937 -758 -591 -667 -820 -0.5% -0.5% -0.5% NET INTERNALCREDIT -735 -335 -1.222 -953 2,919 -1.1% -0.7% 1.8% An execution level of 98% was registered for current expenditure, while the execution rate for investment expenditure stood at 90.3%, representing an increase in nominal terms of 20% and I.4% respectively compared with 2003.  - 92 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 Expenditure Execution in PARPA Priority Sectors In formulating its economic and social plan, the Government has made efforts to reduce the high levels of poverty in the country. The budgetary policy aims to maintain a public expenditure growth rate consonant with macroeconomic stability, to promote private enterprise and to strengthen the legal and institutional framework in order to safeguard business ownership rights. In overall terms, in 2004, the expenditure execution rate (current and investment) was 94.9%. However, execution in priority areas was in the region of 63.3%. Under the ambit of expenditure execution, education, infrastructure, health, good governance, security and the judicial system are the sectors that absorb the majority of resources. Expenditure in PARPA priority areas (billions of Meticais)  - 93 - ECONOMICAND SOCIAL PLAN EVALUATION 2004 2003 2004 CGE RE TOTAL EXPENDITURE 27,345.0 31,8a6.4 Interest on Public Debt 1,318.2 1,321.4 TOTAL EXPENDITURE EXCLUDING INTEREST ON DEBT 26,026.8 30,565.0 TOTAL EXPENDITURE IN PRIORITY AREAS 16,622.7 19,362.3 EDUCATION 4,816.5 6,322.0 PRIMARYAND SECONDARY EDUCATION 3,982.9 5,369.0 HIGHER EDUCATION 833.6 953.0 HEALTH 3,494.4 3,332.1 HIV/AIDS 64.1 140.6 INFRASTRUCTURE 2,930.9 4,187.9 ROADS 1,916.5 3,223.9 WATER AND PUBLICWORKS 1,014.4 964.0 AGRICULTURE AND RURAL DEVELOPMENT 1,676.5 1,333.0 GOVERNANCE, SECURITYAND THE JUDICIAL SYSTEM 2,359.8 2,912.7 SECURITY AND PUBLIC ORDER 1,323.2 1,666.0 GOVERNANCE 558.8 528.7 JUDICIAL SYSTEM 477.8 718.0 OTHER PRIORITY SECTORS 1,280.5 1,134.0 SOCIAL ACTION 266.8 202.0 LABOUR AND EMPLOYMENT 108.4 122.0 MINERALAND ENERGY RESOURCES 905.4 810.0 AS YOOF TOTAL EXPENDITURE (excl. Interest on public debt) EDUCATION 18.5% 20.7% PRIMARYAND 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 PUBLICWORKS 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.O% 0.7% LABOUR AND EMPLOYMENT 0.4% 0.4% MINERAL AND ENERGY RESOURCES 3.5% 2.7% The table above presents developmen,; in the absorption of resources in key areas of the Poverty Reduction Action Plan. Expenditure execution in these areas rose from 16,622 billion Meticais in 2003 to 19,362 billion in 2004, a nominal increase of 16.5%. The execution levels above are the result of implementing a range of fiscal and budgetary policy actions approved for 2004, namely: 0 Conclusion of the preparation of the General State Account 2003 and the revision of the State Financial Administration System Regulations;  - 94 - ECONOMIC AND SOCIAL PLAN EVALUATION 2004 eThe Ministerial Decree 1/2004 was approved and published regarding the architecture of CUT installations, regulations governing movements (payments and deposits) of the Treasury bank account and the documentation and daily operations in the banking system in general; eStart of entering e-SISTAFE data into the computer system (regarding State Budget execution for 2004); eConclusion of the study into Programme-Based Budgeting, with the objective of supporting MPF and the Sectoral Ministries in discussing the pre-requisites for the effective introduction and implementation of Programme-Based Budgeting; e Conclusion of preparatory work for creating the Tax Administration and submitting the respective Statute for approval; e Restructuring the central and local organs of the Tax Administration due to the alterations in the taxation system; e Updating the Business Social Capital Register; e 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. e Preparation of Management Accounts by the General Gambling Inspectorate for the 2003 financial year, and its submission to the Administrative Tribunal; e Preparations in progress of the bill for the simplified SlSA Code to be submitted to the Council of Ministers in the third quarter of the year. e The bill was prepared for the General Taxation Law, approved by the Government and submitted to Parliament. e The initial versions of the Customs regulations for Coastal Trade and On- Board Consumption. The study was also completed comparing national customs legislation with Kyoto Convention recommendations. e Proposals are being prepared for the bill concerning the Legal Code for Customs Infractions, Legal Costs Regulations and the Customs Proceedings Code.  - 95 - I 0 Z i= a 3 a 2 f" g m n Z a ! 0 i> E0 i3a Z 0 z 0 - w I I I 5 Dn E C Y a r= B ill al i 0 j Y 3 7 $g .-cP : N - u. .ii P 4- 7 Q 7 5 W vi s P2 5e % L  - 96 - 0 'CI 0 N a 9  - 97 - * 0 0 hl Z G t- a 3 3 W Z 4a $ G 0 0 n Z a 0 2 0 Z 0 0w  - 98 - 8 0 hl z 0 %3 s W z 4a $ T5 0 v, n z a 0 H 0 z > > 0 0 W  - 99 - 8 0 c\I z 0 5 s 3 W Z -I a a ;2 G 0 CT) n Z a 0 z 0 Z 0 0 W  - 100- d- 0 0 cv Z 0 z 3 3 W Z 4 a -I G a 0 cn n Z a -0 0 B 0 2 Z 0 0 W  r- - 101- bo 0 N Z o_ 7 23 3w z 4a 1 4 0 0 u3 0 z a L, 0 20 z 0 0 W  - 102- 8 0 cu z 0 F a 3 sw z 4 n a 9 0 v) 0 z a 0 2 0 z g N 0 0 w  - 103 - 8 0 cu Z 0 2 3 -I s W 7 > 7 7 Z 4a a5 0 cn n Z a 0 z 0 Z 7 0 0 W  - 104 - vi :: ? s3  - 105- ECONOMIC AND SOCIAL PLAN EVALUATION 2004 MEDIUM TERM MACROECONOMiCFRAMEWORK 2003 Actual Prelim 2005 2006 2007 2008 National Income and prices (Annualpercentage, unless othewise specified) NominalGDP (in biilions of meticals) 113.810.7 137,424 8 159,912.0 184,289.0 208,813.0 235,193.0 NominalGDP (in billions of US. Doilars) 4.8 6 1 8.2 9.2 10.0 10.9 Reai GOPgrowth (Oh) 7.8 7 2 7.7 7.4 6.4 6.4 GDP per capita (in US. Dollars) 258 320 424 460 491 522 Consumer price index (annual average) 13.4 126 8 0 7.3 6.5 5.9 Consumer pnce index (andof penod) 13.8 9 1 8.0 7 0 6.0 5.8 Externalsector Merchandiseexports 28.9 44 1 13 9 1 9 1 8 6 3 Merchandiseimports 12.8 16 9 15 6 2 8 10 0 2 9 Terms of trade .I4 13 4 2 2 -7 3 -8 9 -2 8 Nominaleffective exchangerate (end of period) 11 -10 9 17 9 Real effective exchangerate (end of period) 11 -2.7 24 8 (inpercentageof GDP) Externalcurrent account, aHer granis 9.2 5 8 7.1 6.8 9 2 7.5 Governmentbudget Total revenue 12 9 12 3 13 2 140 14 6 15 1 Tax revenue 12 0 11 3 I t 8 12 5 12 9 13 4 Non tax revenue 1 0 0 9 1 4 1 5 1 6 1 7 Total expenditureand net lending(incl residual) 26 5 23 7 25 6 24 2 24 5 24 8 Current expenditure 14 4 138 13 7 136 14 0 14 1 Compensationto employees 6 8 6 7 6 9 6 9 6 9 7 0 Goods and services 3 5 3 4 3 5 3 5 3 6 3 5 Interest on public debt 1 2 1 0 0 8 0 9 1 0 1 1 Transfer payments 2 9 2 7 2 5 2 4 2 5 2 5 Capital expenditure 11 7 9 1 10 8 9 8 9 7 9 9 Net lending 0 4 0 8 1 2 0 7 0 8 0 8 Overail balance, before grants -14 0 -11 7 -12 4 -10 2 .10 0 -9 7 Total grants 9 5 7 3 6 4 5 8 5 6 5 5 Overail balance, after grants -4 5 -4 4 -6 0 -4 4 -4 4 -4 2 Central bank transfer of HiPC assist By the iMF 0 2 0 4 0 2 0 2 0 1 0 0 Net extemai borrowing 4 2 2 8 4 7 4 2 4 2 4 1 Net domestic financing 0 1 -0 5 1 1 0 0 0 0 0 0 Memorandumitems Domesiic pnmary balance -3 7 -3 7 -2.8 -1.6 -1.7 -1.5 Excludingbank restructuring Sources. Mozambiquenauthorities; and IMF staffestimates and projections 11A minus sign indicates depreciation REVIEW OF ECONOMICAND SOCIAL PLAN 2003 Actual Prelim 2005 2006 2007 2008 (Inpercent of exports of goods and nonfactorservices) Net present mlue of totai publicexternaldebt outstanding21 102 0 83 8 83 6 89 5 96 0 99 3 Externaldebt sewice (nonfinancial public sector) Scheduied.after original HiPC Initiativeassistance 9 3 6 1 6 0 6 1 6 2 6 2 Scheduled,after enhancedHiPC Initiativeassistance 7 0 4 3 4 3 4 6 4 7 4 7 Scheduied.after additional bilateralassistance 6 1 4 5 5 1 5 3 5 4 5 2 (In millions of U S. dollars,unless othewise specified) Externalcurrent account, after grants -440 -352 486 -627 -916 -814 Overaii baiance of payments 122 212 -84 -30 59.0 97 Net internationalreserves(end of penod) 738 960 900 902 994 1,123 Gross internationalreserves (end of penod) 947 1,159 1,076 1,045.0 1.104 1,201 in months of imports of goods and nonfactorSeMces 5.4 5.8 4.7 4.4 4.1 4.3 21 Public andpubiiciyguaranteed.in percent of the three-yearaverageOfeXpORS. The data for 1999-2000include the impactof totai debt reliefgranted under the originai HPC Initiative.Datd for 2001-03 include tho impact of total debt reiiefunderthe enhancedHPC initiatke, additionalbilateral amstance. and new borrowing   (Translatedfrom Portuguese) REPUBLIC OF MOZAMBIQUE 1ECONOMICAND SOCIAL PLAN FOR 2005 ~ 11TH of March 2005   - 2 - ECONOMICAND SOCIAL PLAN FOR 2005 CONTENTS I. INTRODUCTORY NOTE................................................................................... 3 II. INTERNATIONAL CONTEXT........................................................................... Ill.111.1 4 NATIONAL SOCIAL AND DEMOGRAPHIC CONTEXT.................................. 7 111.2. MILLENNIUM DEVELOPMENT GOALS (MDGs) ..................................... CENTRAL OBJECTIVES AND PRIORITIES OF THE GOVERNMENT ....7 9 111.3. PROJECTIONS OF THE DEMOGRAPHICAND MACRO-ECONOMIC IV.IMPACT 12 MACROECONOMIC NATIONAL CONTEXT ................................................ OF HIV-AIDS.................................................................................... 20 IV.1. OVERALL AND SECTOR PRODUCTION ............................................. 20 A.AGRICULTURE, LIVESTOCK AND FORESTRY ................................... 22 B. FISHERIES............................................................................................. 26 C. EXTRACTIVE INDUSTRY..................................................................... 27 29 E. ELECTRICITY AND WATER .................................................................. D. MANUFACTURING INDUSTRY............................................................. 30 F. CONSTRUCTION ................................................................................... 31 G . TRADE ...................................................................................................31 H. RESTAURANTS AND HOTELS ............................................................. 32 32 IV.2. MONETARY AND EXCHANGE SECTOR.............................................. I. TRANSPORT AND COMMUNICATIONS ................................................ 33 IV.3. INFLATION............................................................................................. 34 37 V MAIN DEVELOPMENTS BY SECTOR.......................................................... .IV.4. BALANCE OF PAYMENTS .................................................................... 38 V.l . SOCIAL AREA......................................................................................... 38 A. EDUCATION ........................................................................................ 38 48 C. HEALTH.................................................................................................. B. SCIENCE AND TECHNOLOGY ............................................................. 50 55 E. WOMEN'S AFFAIRS AND SOCIAL ACTION ......................................... D. LABOUR................................................................................................. F. VETERANS OF THE NATIONAL LIBERATION STRUGGLE.................57 62 G. CULTURE............................................................................................... 62 H. YOUTH AND SPORTS........................................................................... 64 66 V.2 ECONOMIC AREA ................................................................................... I. ENVIRONMENT....................................................................................... 69 A. AGRICULTURE ...................................................................................... 69 B. INFRASTRUCTURES............................................................................. 70 C. FISHERIES............................................................................................. 76 D. MINERAL RESOURCES ........................................................................ 78 E. INDUSTRY AND TRADE ........................................................................ 81 G. TRANSPORT AND COMMUNICATIONS............................................... F. TOURISM................................................................................................ 82 84 V.3. GOOD GOVERNANCE, LEGALITY AND JUSTICE, 86 V.4. FOREIGN RELATIONS AND DEFENCE ................................................ DECENTRALISATION AND DECONCENTRATION ...................................... 93 APPENDIX 1- REDUCED MATRIX OF MAIN INDICATORS ......................... 105   - 3 - ECONOMIC AND SOCIAL PLAN FOR 2005 1. INTRODUCTORY NOTE The government`s five year plan for the period 2005-2009 sets its main objectives as: (i) Reducing the levels of absolute poverty, which will be pursued through activities in education, health and rural development; (ii) Rapid and sustainable economic growth, focusing attention on the creation of an economic environment that favours private sector activity; (iii) The economic development of the country, aimed in the first place at the rural areas, and having in mind the reduction of regional imbalances; (iv) The consolidation of peace, national unity, justice, democracy and national awareness, as indispensable conditions for the harmonious development of the country; (v) The fight against corruption, crime and red tape: and (vi) The strengthening of sovereignty and international cooperation. The current document, the Economic and Social Plan for 2005, is the first stage in making operational the government's five year programme for 2005-2009. With it, a new structure is being consolidated, one which was stated in the most recent documents drawn up, and which attempts to ensure better consistency between the various planning instruments as they interact. Thus the current document consists of four major chapters: namely, International Context, National Macro-economic Context, Main Developments by Sector, and Budgetary Policy. In the international context, the document presents the evolution of the international economy so as to understand under what economic conditions the country will have to implement its economic and social policy; the chapter on the nationaI macroeconomic context presents the major macroeconomic objectives, and the evolution of the main economic indicators: the chapter on the main developments by sector presents the main policy measures to be implemented by the government, targets and activities. The chapter on budgetary policy presents the package of resources, their source and respective distribution in order to comply with the present Economic and Social Plan. Appended is a matrix of main indicators which makes it possible, in summary form, to assess the government's performance in key sectors.  - 4 - ECONOMIC AND SOCIAL PLAN FOR 2005 II. INTERNATIONALCONTEXT 2003 ended with a recovery in the world economy (3.9%). 2004 was characterised by a relatively sustainable performance by the world economy. It is estimated that growth reached about 5%, one of the highest figures in the last 30 years, according to the International Monetary Fund (IMF). This growth is essentially due to the performance of the American and Asian economies, and particularly of Japan and China. Latin America also shows signs of recovery, and Africa is showing relatively good prospects. Despite this recovery, as from the third quarter of 2004 there was a trend towards reduced growth, particularly in the USA, in Japan and in China, due to increased oil prices (in mid-August the price of a barrel was around 44.7 dollars). The risks facing us in 2005 are still linked to the behaviour of oil prices. Inflation risks are relatively low but there should be greater control over interest rates. The fiscal deficits in the advanced economies will continue to pose a challenge in 2005, since these economies, taken together, had a fiscal deficit equivalent to 3.4% of their Gross Domestic Product (GDP). According to recent estimates, made by the IMF and the OECD (Organisation for Economic Cooperation and Development), in 2005 the world economy will grow by almost 4.3%. It is estimated that the growth in developing countries was 6.6% in 2004, and will be 5.9% in 2005. Africa was expected to reach a 4.5% growth rate in 2004 and 5.4% in 2005. IWorld Forecasts(Growth Rates) I 2004 200q GDP Growth 5.0 4.3 USA 4.3 3.5 Japan 3.4 2.3 Euro Zone 2.2 2.2 Advanced economies 3.5 2.9 DevelopingCountries 6.6 5.9 Africa 1 4.5 5.4 South Africa 2.6 3.3 InternationalTrade 8.8 7.2 Imports Advanced Economies 7.6 5.6 DevelopingCountries 12.8 11.9 Exports I Advanced Economies 8.1' 6.3 Developing Countries i 10.8 10.6 Source: IMF, "odd Economic Outlook (October2004); OECD, Economic Outlook (June2004).  - 5 - ECONOMIC AND SOCIAL PLAN FOR 2005 Global international trade in goods and services will grow by about 9% in 2004, and a growth of about 7% is forecast for 2005. Imports and exports, for 2005, both for the advanced and for the developing economies will present rhythms of growth at the levels of 2004, which are higher than those of 2003. It is estimated that the GDP of the United States of America grew at a rate of 4.3%, in 2004, and the American economy is forecast to grow by 3.5% in 2005. In 2004, the Federal Reserve Bank increased the interest rate (federal-funds) as a way of controlling inflation, taking into account the growth that is occurring. For 2005, it is thought that investment will grow, as well as the external sector, particularly exports. Internal demand will also increase. In Japan growth in 2004 is relatively high, and may reach a growth rate of above 3%. For 2005, the forecast is 2.3%. This rate will be the result of continued high growth rates in exports at the levels of 2004, and a recovery, albeit moderate, in investment and domestic demand. In the European Union, in the Euro zone GDP growth in 2004 is estimated at 2.2%, and the same rate is projected for 2005. Unemployment remains relatively high (9% in 2004 and 8.7% in 2005). A recovery of non-residential investment and also of private consumption is forecast for 2005. The GDP growth rate in South Africa for 2004 is estimated at 2.6%, and the 2005 forecast is 3.3%. Zimbabwe recorded a negative growth rate in 2003 of -9.3%. The estimate for 2004 is -5.2%, and for 2005 the IMF forecasts a growth rate of 1.8%. In 2003 inflation was about 431.7%, in 2004 about 350%, and for 2005 an inflation rate of around 450% is forecast. The terms of trade for the advanced economies show a certain stagnation in the 2004-2005 period. The table below shows the growth rate of the Consumer Price Index for 2004-2005. In the advanced economies, there will tend to be price stability at relatively low inflation levels (2.1%), while in the developing economies, inflation is estimated at between 5.5 and 6%. In Africa inflation will be around 8%. It is forecast that interest rates in the most developed economies will tend to rise slightly, as a way of holding back potential inflation risks, given that these economies have been recovering.  - 6 - ECONOMIC AND SOCIAL PLAN FOR 2005 I PERCENTAGEFORECASTS I 2004 I 2004I Terms of Trade Advanced Economies 0.1 0.6 DevelopingCountries 3.2 -0.3 Prices in dollars , Manufacturedgoods 7.5 1.5 Oil 28.9 Commodities ' 16.8' -3.9 Inflation USA 3.0 3.0 EuroZone 2.1 1.9 Advanced Economies 2.1 2.1 DevelopingCountries 6.0 5.5 Africa 8.4 8.1 II I 2004 200dI Short term interestrates I USA 1.5' 2.5-3.01 United Kingdom 4.9 4.9-5.3 EuroZone 2.1 2.2-2.7 Japan 0.0 0.0 Advanced Economies 1.9 1.9-2.5 Unemployment USA 5.5 5.4 Japan 4.7 4.5 Euro Zone 9.0 8.7 Advanced Economies 6.3 6.1 For 2005, unemployment rates in the advanced economies are forecast to decline slightly compared with 2004 levels.This is an indicationthat the recovery, in terms of job creation, of the world economy still faces some challenges in 2005. These forecasts point to an international economic scenario for 2004-2005 in which a relatively sustainable recovery occurs, but where it is still necessary to ensure that growth is more balanced in the various regions of the world. There are still some risks to be considered: oil prices, and the fiscal deficits of the developedeconomies.  - 7 - ECONOMIC AND SOCIAL PLAN FOR 2005 111. NATIONAL SOCIAL AND DEMOGRAPHIC CONTEXT 111.I CENTRAL OBJECTIVESAND PRIORITIES OF THE GOVERNMENT In the five year period 2005-2009, the government will continue the efforts under way, concentrating its activity on pursuing the following objectives: 0 Reducing the levels of absolute poverty, which will be pursued through promoting rapid, sustainable and wide ranging economic growth, focusing attention on creating an environment favourable to investment and the development of the national business class, and through activities in education, health and rural development; 0 The economic and social development of the country, oriented in the first place to the rural areas, having in mind the reduction of regional imbalances; 0 The consolidation of National Unity, Peace, Justice and Democracy, as well as citizens' spirit of self-esteem, as indispensable conditions for the harmonious development of the country; 0 Valuing and promoting the culture of work, enthusiasm, honesty and accountability; 0 The struggle against corruption, red tape and crime; The strengthening of Sovereignty and International Cooperation. Poverty reduction is a challenge for everyone and a fundamental condition for promoting human, economic and social development, in the countryside and in the cities. This vision includes objectives that may be reached in the short, medium and long terms, enshrined in the national development plans, and in the strategies for fighting poverty and HIV/AIDS, as well as in programmes of regional, continental and international scope, with greatest stress on the New Partnership for Africa's Development (NEPAD) and the Millennium Development Goals (MDGs). The objective of reducing the levels of absolute poverty presupposes the priority channelling of basic services to the neediest strata of the population. Hence the main activity of the government will be oriented to improving the living conditions of the majority of our population, which consists of women. Thus women will be at the centre of attention, seeking to ensure that they enjoy  - 8 - ECONOMIC AND SOCIAL PLAN FOR 2005 equality of opportunity and rights, raise their educational level and strengthen their role as educators of future generations, as regards shaping the personality of Mozambicans. Since the majority of the population in the rural areas still lives in extreme poverty, the government will pay greatest attention to promoting actions that seek the accelerated and sustainable development of the rural areas, and will multiply initiatives aimed at creating wealth in the countryside, as its fundamental strategy in the struggle against poverty. The government regards the market economy as one of the catalysts for speeding up the country's sustainable economic development. To this end, it will continue implementing actions seeking rapid and multi-sector development in all parts of the country. The harmonious development of the country will be supported by the establishment of conditions for increasing investment and for the flowering of the private sector. The government fights for good governance, based on the principles of participation in decision making, transparency in the management of the public domain and regular accountability. Thus, corruption and its expressions, which form a phenomenon that blocks the country's social and economic development, will be fought against, with resort to political, penal and judicial measures. The government will continue establishing conditions for strengthening our sovereignty through strengthening the security of the state, of the economy, and of the defence of citizens' interests. The government shall also continue to deepen bilateral and multilateral cooperation with all partners and friends, as well as tightening the bonds of international cooperation in order to consolidate Mozambique's integration into regional and international blocs. Special attention will also be paid to Mozambicans in the diaspora, since they are an integral part of Mozambican society, and enjoy the same constitutional rights and duties. The reduction of absolute poverty, through promoting social and economic development, includes, among others, the following components: 0 Transformation of the socio-demographic characteristics so as to reproduce a substantially better educated and healthy population, consisting of citizens who are better prepared to face the challenges of a dynamic world. Among a population that is on average better educated, and more employable, one should note a significant segment of people endowed with initiative, with  - 9 - ECONOMIC AND SOCIAL PLAN FOR 2005 innovative and entrepreneurial capacity, and who may stimulate the appearance and development of institutions, particularly dynamic companies, of all sizes. 0 Development and provision of basic infrastructures (physical, and concerned with the development of applied technological research and extension), and institutional infrastructures that make viable the flourishing of private initiative and investment (national and foreign) on a broad and inclusive base, creating a solid, sustainable and competitive economy in the context of normal insertion into the world market. For pursuing the objectives of the government programme, key areas for action are the following: 0 Education 0 Health Infrastructures 0 Agriculture Rural Development Good Governance, Legality and Justice Macro-economic, Financial and International Trade Policies 111.2. MILLENNIUM DEVELOPMENT GOALS (MDGs) The Economic and Social Plan is an important instrument for assessing the country in respect of attaining the Millennium Development Goals (MDGs). The present draft Economic and Social Plan takes the Millennium Development Goals into consideration. These targets are a series of objectives for human development that were established under the Millennium Declaration, which was signed in September 2000 by 147 countries. There exist the following MDGs to be attained by 2015: o Eradicate extreme poverty and hunger; o Achieve universal primary education; o Promote gender equality and empower women; o Reduce child mortality; o Improve maternal health; o Combat HIV/AIDS, malaria and other diseases; o Guarantee environmental sustainability;  - 1 0 - ECONOMIC AND SOCIAL PLAN FOR 2005 o Develop a global partnership for development. For each objective the United Nations has designed specific targets that can be monitored through quantitative indicators. However, it has been necessary to adjust these targets in the national context to monitor the level of Mozambique's performance in the context of the MDGs. For example, the indicators suggested by the United Nations cannot always be collected annually, so that in these cases indicators more appropriate for the case of Mozambique are chosen. 1. Eradicate Extreme Poverty and Hunger A global MDG target with the objective of cutting by half the percentage of people living in extreme poverty or suffering from hunger, between 1990 and 2015. It should be noted that the targets established in PARPA are, in general, consistent with the MDG targets. Out of a population estimated at 18.3 million, almost 10 million are still poor. In future, while poverty measured by consumption is an integral component of a multi-dimensional concept of poverty, some attention should be directed to aspects of poverty such as access to public services, which are not directly measured through household surveys based on consumption. 2. Combat HlVlAlDS One of the MDGs is to halt, and begin to reduce, by 2015, the spread of HIV/AIDS. In order to understand the true scale and geographical distribution of the HIV/AIDS problematic, studies have been held into the prevalence and the demographic and macro-economic impact of this pandemic. To attain this objective, in 2005 action will remain concentrated on the treatment of opportunistic infections, on providing advice about forms of prevention, on supplying anti-retroviral drugs to 25,000 people, including 15,000 pregnant women, and on providing home care to patients with HIV/AIDS. It is expected that in 2005 the HIV prevalence rate among adults will reach 15.6%. 1. Basic comforts One of the MDGs is to cut the proportion of people without access to clean drinking water by half, by 2015. In 1992, according to the statistics of the Public Works and Housing sector, 10% of rural households had access to safe drinking water, while in 2003 the figure was 39.4% of households. In urban areas, the rate of growth has been slower, from 29% in 1991 to 33.3% in 2003. An important factor associated with this situation is rapid migration. Thus, although the absolute .number of individuals in the urban areas who have access to safe drinking water has increased considerably, the coverage has increased more slowly, when viewed as a percentage of the urban population. However, as a  - 11 - ECONOMIC AND SOCIAL PLAN FOR 2005 result of the new urban water and sanitation project in several cities, this number should grow rapidly. 4. Universal Primary Education One of the MDGs is to achieve universal access to primary education by 2015. Universal primary school enrolment remains a major challenge for Mozambique. To achieve this goal, efforts in 2005 will remain concentrated on expanding access and improving the quality of education. Thus, it is envisaged that the net enrolment rate in EPI will rise from the current 75.6% to 79% and that the gross admission rate will increase by 19.1% rising from the current 137.6% to 156.7%. In terms of improving the quality of education, the new national curriculum will be introduced in 2nd, 4th and 7th grades; the new curriculum will be adopted in the teacher training institutions (CFPP and IMAP) and the free distribution of school textbooks and other educational material will continue. 5. Gender equality One of the MDGs is to eliminate gender inequality in primary and secondary education, preferably by 2005, and in all levels of education by 2015 at the latest. In recent years the gender gap in primary education has decreased notably. The Education Strategic Plan proposes increasing access to education, with special stress on girls' education. Apart from this, there are programmes such as "Ratio for Girls" which make a major effort to increase the number of female teachers. If current trends persist, it is likely that the objective of reaching gender parity in education will be achieved in first level primary education in 2005, or shortly afterwards. 6. Reduce child mortality A further MDG is to reduce mortality among under fives by two thirds by 2015. To attain this MDG, Mozambique needs to reduce the mortality rate among children under five from 277/1,000 live births in 1994 to 82/1,000 live births in 2015. The Expanded Vaccination Programme forms part of the government's efforts in this area. The PARPA objective for 2005 of 98% coverage of BCG (against tuberculosis) was already achieved in 2003. However, much effort is still needed to raise the coverage rate of the DTP (3) vaccination. As part of the effort to reduce child mortality, vaccination activities will be undertaken for children aged 0-23 months, children in the first grades of school, and women of child-bearing age (15-49 years). Thus it is expected to reach a 98% coverage rate of the BCG vaccine, 98% coverage of the VAS vaccine, and 95% coverage of DPT (3).  - 1 2 - ECONOMIC AND SOCIAL PLAN FOR 2005 7. Improve maternal health Reducing maternal mortality by three quarters by 2015 is one of the MDGs. A central component of the Strategic Health Plan and of PARPA is the Mother and Child Health and Family Planning Programme (SMI/PF). The PARPA target of cutting the hospital rate of maternal mortality from 175 per 100,000 in 2000 to 160 in 2005 can be achieved. In order to improve maternal health, implementation of the Mother and Child Health and Family Planning Programme will continue. Thus a reduction in the hospital maternal mortality rate to 0.16% is expected. Institutional births and family planning (new users) should reach coverage rates of 49% and 20%, respectively. 8. Combat malaria One MDG is to halt, and begin to reverse, by 2015, the incidence of malaria and other significant diseases. Prevention programmes are common and effective treatment in hospital continues to be followed closely. To combat malaria, the use of insecticide treated mosquito nets will be promoted, spraying with insecticides will be undertaken where recommended, and cases of fever will be treated in the community in accordance with the habits prevailing in the communities. Thus it is expected to reach in 2005 a hospital malaria lethality rate in children and in adults of 2.7% and 5.3%, respectively. 9. Environmentalsustainability A further Millennium Development Goal is to integrate the principles of sustainable development into the country's programmes and policies, and reverse the loss of environmental resources. To achieve this goal, in 2005 priority will be given to publicising the Environmental Strategy for the Sustainable Development of Mozambique, to actions raising awareness of environmental issues, and to the formulation and implementation of specific environmental management policies/programmes. 111.3. PROJECTIONS OF THE DEMOGRAPHIC AND MACRO- ECONOMIC IMPACT OF HIV-AIDS The projection for the size of the Mozambican population in 2005 is 19,420,036 inhabitants, 10,051,611 women and 9,368,425 men with a dependency rate of 86.2%.  - 1 3 - ECONOMIC AND SOCIAL PLAN FOR 2005 After the information published from the 2002 epidemiological surveillance round, the Multi-Sector Technical Support Group for the Fight against HIV/AIDS updated the information on the demographic impact of HIV/AIDS in Mozambique in order to better guide the initiatives of all stakeholders in the struggle against HIV/AIDS. The table below presents the national HIV prevalence rate among the adult population (aged between 15 and 49). If the historical pattern is followed, without immediate and effective intervention, by 2010 the prevalence rate will reach 16.8%. Graph : National Prevalence of H I V in Adults (15 -49 years) BiE 20% $.- 15% E & 10% 1998 2001 2004 2007 2010 Table: HlVlAlDS prevalence among adults (15-49 years), by region and nationally Both Sexes South ICentre INorth INational 1998 8.2% 12.2% 3.2% 8.2% 1999 9.9% 13.3% 4.1% 9.4% 2000 11.6% 14.2% 5.3% 10.6% 2001 13.2% 15.0% 6.8% 11.8% 2002 14.5% 15.7% 8.4% 13.0% 2003 15.6% 16.2% 10.0% 14.0% 2004 16.4% 16.7% 11.5% 14.9% 2005 2006 17.2% 17.3% 13.8% 16.1% 2007 17.3% 17.5% 14.6% 16.5% 2008 17.3% 17.6% 15.1% 16.7% 2009 17.2% 17.7% 15.4% 16.8% 2010 17.1% 17.7% 15.5% 16.8%  - 1 4 - ECONOMIC AND SOCIAL PLAN FOR 2005 In 2004, in the south, the lowest prevalence rate is recorded in lnhambane province (8.6%), and no great differences are noted between the prevalence rates in Maputo City (17.3%), Maputo Province (17.4%) and Gaza (16.4%). In the Centre, Sofala province has the highest prevalence rate (26.5%) followed by Manica with 19%, Tete with 14.2% and Zambezia with 12.5%, while in the north, Niassa province (11.I %) shows the highest prevalence, followed by Nampula (8.1%) and Cab0 Delgado (7.5%). In terms of the number of people living with HIVIAIDS in Mozambique, the projections indicate that about 1.4 million people were infected with the virus in 2004. Of these, 68,000 are children (0-4 years), 529,000 are men (15-49 years) and 779,000 are women (15-49 years). Projection of number of people living with HIVIAIDS 1,200,000 1,000,000 800,000 - 600,000 400,000 200,000 0 To calculate the projection of new cases of AIDS it must be borne in mind that the period from infection with HIV until the development of full-blown AIDS varies with age. Normally this period is shorter in children than in adults, with a median of 1 and 8 years respectively. It is estimated that 500 people are newly infected with HIV every day. The majority of new cases of AIDS will occur among people who are currently HIV positive. According to the projections, the number of new cases of AIDS might reach 178,084 by 2010 if there are no effective interventions.  - 1 5 - ECONOMIC AND SOCIAL PLAN FOR 2005 Graph: New Cases of AIDS 1999-2010 200,000 150,000 100,000 50,000 0 1949 2001 2003 2005 2007 2009 In a short time AIDS has become one of the main causes of death in Mozambique. The graph below shows the accumulated deaths due to AIDS. From this graph it can be seen that in just 5 years, from 1999 to 2003, 309,814 people died from AIDS. The number of deaths estimated for 2004 is 97,079. It is important to stress that this mortality is differentiated by regions. About 58% of the deaths happened in the Central region of the country. The fact that this region is so much worse hit than the other regions may be explained by factors such as the larger size of the population, and the earlier start of the epidemic. It is forecast that in the next 7 years, the number of deaths from AIDS in Mozambique will triple, even with the expansion of ARV therapy. G r a p h : A c c u m u l a t e d D e a t h s f r o m A I D S 1 9 9 9 - 2 0 1 0 I . l O O . Q O 0 7 I 2 0 0 0 0 0 7.000 0 0 0 8 0 0 0 0 0 B O O 0 0 0 40 0 .O 0 0 a o o 0 0 0 0 . . . . 3 9 9 9 2 0 0 1 2 0 0 3 2 0 0 3 2 0 0 7 2 0 0 9  - 1 6 - ECONOMIC AND SOCIAL PLAN FOR 2005 Projection of the number of deaths from HlVlAlDS 60000 40000 - 20000 The graph below refers to children aged 0-17 years, whose mothers died of AIDS and from other causes. A comparison of the orphans whose mothers died of AIDS with orphans whose mothers died from other causes shows a very large difference. We note that the number of maternal orphans due to AIDS is tending to increase, while the number of orphans whose mothers die for other reasons is tending to decline slightly. It is forecast that the number of maternal orphans due to AIDS will increase from about 227,834 in 2004, to about 272,051 in 2005. Over time, the proportion of these AIDS orphans will tend to rise. In 2010, if there is no effective intervention, it is expected that more than 500,000 maternal orphans (about 48% of all maternal orphans), will result from AIDS. It is important to stress that the fact that the mothers died of AIDS does not mean that all the orphans carry the HIV virus. In reality most of these orphans are HIV negative, either because they were born before their mothers were infected, or because vertical transmission did not occur. Graph 9: Maternal Orphans (0-17 years), 1999-2010 1.200.000 -AIDS 1.000.000 --Other Causes .....-...--....-- 800.000 600.000 _c-- -------- 400.000 200.000 0 . . . . . . . . . . . . I999 2001 2003 2005 2007 ZOO9  - 1 7 - ECONOMIC AND SOCIAL PLAN FOR 2005 A further consequence of AIDS is the reduced life expectancy or longevity of the population, as can be noted from the graph below. In a scenario without AIDS, it has been estimated that life expectancy at birth would rise from approximately 44 years in 1999 to about 50 years in 2010. But considering the effects of the epidemic, the longevity of Mozambicans could be lower in future. For the year 2010, it is forecast that this deficit may rise to over 14 years, if there are no effective interventions. Graph :Life expectancy 1999-2010 10,o +With AIDS 1," I 1999 2000 2002 2004 2005 2010 This study presents relevant data for designing action in the struggle against HIV-AIDS. Analysis of the data from the 2002 round strengthens the hypothesis that the Central region has reached the mature phase of the epidemic's evolution, with the exception of Zambezia, where the epidemic is growing. The Southern region, with the epidemic slowly on the rise, is in the intermediate phase of the epidemic's evolution. In the Northern region, the epidemic seems to be still in a phase of growth. Young people, particularly girls, are the most vulnerable group. The mortality caused by AIDS is changing the population structure due to a sudden decrease in the number of adults over 30 years old. This will have negative effects on the country's socio-economic fabric. For 2005, in the struggle against the spread of HIV/AIDS, the government's actions will concentrate on: Increasing access to testing and counseling services; 0 Reducing HIV transmission from mother to child, through supplying anti- retroviral drugs; Increasing the capacity of the health units to diagnose and treat opportunist diseases;  - 1 8 - ECONOMICAND SOCIAL PLAN FOR 2005 Anti-retroviral treatment in selected health units, expecting to cover 20,800 people; Provision of home care to patients with HIV/AIDS; 58% of funds channelled by the CNCS-SE to OSC's (Civil Society Organisations), and public and private sector institutions to strengthen their capacities; 20% of community initiatives supported by CNCS-SE in supporting the country's orphans and vulnerable children; Ensuring improved coordination of interventions by all partners involved in the fight against HIV/AIDS, in the light of PEN II and of the Operational Plan in the framework of the national response; Divulge the Strategic Plan for the Fight against HlVlAlDS - PEN 2005/2009 (PEN II) and its respective Operational Plan; Ensure that all sectors draw up operational plans that contribute to meeting the objectives and targets of PEN II; Encourage the various sectors to promote harmonisation of their respective development plans and programmes with the national strategy to fight against HIV/AIDS; Negotiate simplification of disbursement mechanisms and administrative procedures for the funds made available for the fight against HIV/AIDS; Propose the establishment of levels of authority by administrative division for the approval of projects against HIV/AIDS; Ensure greater involvement of local communities and their leaderships in actions fighting against HIV/AIDS; and Strengthen the income generating capacity, the food security and nutritional support of individuals, families and communities affected by HIV/AIDS. In 2005, it is expected that the HIV prevalence among adults will reach 15.6%. Macro-economicimpact of HIV-AIDS The literature on HIV/AIDS and economic growth is far from drawing definitive conclusions as to the magnitude of the impact and the relative importance of various channels through which this impact may occur. Nonetheless, some essential indications arise from the analyses made so far. Among them, the long duration of this pandemic is crucial. For example, the official projections of the demographic impact of HIVIAIDS on Mozambique assume an interval of 9 years between infection and death. Given the long period separating infection and death, the projections for deaths from AIDS up to 2013 are already essentially  -19- ECONOMIC AND SOCIAL PLAN FOR 2005 programmed within the system. This happens because most of the people who, according to the estimates, will die in this decade, and at the start of the next decade, are currently infected with HIV/AIDS. Given that the pandemic is going to continue over a long period of time, small impacts on the determinants of growth (such as technical progress, physical capital and human capital) are going to accumulate, with substantial implications for the economy. Recently, special attention has been paid to the accumulation of human capital. With AIDS it is expected that the population of school age will shrink, reducing that part of the school age population who actually attend school. This calls into question the capacity of the education system to carry out its duties. All these factors point to a reduction in the ratio of accumulation of human capital. If, as is believed, educated people tend to be more productive and innovative, then lower rates of accumulation of human capital, due to an educational system that has deteriorated, will reduce the economic growth rate, possibly during a considerable period of time. Analyses of the implications of HIV/AIDS for growth, using a computational model of general equilibrium for Mozambique undertaken in 2001-2002, show that AIDS cases and deaths may have a great impact on economic growth. The analyses show that annual GDP growth rates per capita would be between 0.3% and 1.0% lower than in a fictitious scenario without AIDS, during the period from 1997 to 2010, with strongest effects in the period 2005 - 2010. The largest causes of reduction in growth are: (1) slower productivity growth rate, (2) slower rate of population growth and of accumulation of human capital, and (3) reduced ratio of accumulation of physical capital. Each of these three effects is important. Given that the HIV-AIDS pandemic will probably last for a prolonged period of time, the impacts mentioned will go on accumulating, resulting in major long term impacts on the economy. Consequently, successful initiatives in preventing faster spread of HIV infection, and in fighting economic upheavals due to deaths from AIDS, while maintaining at the same time the basic conditions for growth, will probably earn large returns. Maintaining the basic conditions for growth is also important. PARPA envisages growth in GDP of about eight per cent, and in per capita GDP of five per cent per year - growth rates that were achieved in the previous decade. As for economic growth per capita, the projected impacts of AIDS on economic growth represent a fraction of the target. For the period 2005-2010, this fraction should be within the interval of between I O and 50 per cent of the target growth rate per capita of five per cent. Thus, mitigating the pandemic and maintaining the basic conditions for economic growth are both important for continued economic growth and poverty reduction, although the second element (the maintenance of the basic conditions for economic growth) is probably more important.  - 20 - ECONOMIC AND SOCIAL PLAN FOR 2005 IV. MACROECONOMIC NATIONAL CONTEXT The results observed over the past year during the implementation of the 2004 PES indicate that the targets laid down are being reached. The preliminary data indicate: 0 A growth in Gross Domestic Product of 7.2%. 0 An accumulated inflation rate of 9.3%. 0 A growth in commodity exports, excluding those from mega-projects, of about 11%. For 2005, the government's economic and social policy, following and making operational the strategy for the struggle against absolute poverty, expressed in the Action Plan for the Reduction of Absolute Poverty (PARPA), will continue to be marked by a series of actions contributing to sustainable economic growth and to reducing absolute poverty and social inequalities. Thus the main objectives to be achieved are set as follows: 0 A growth in Gross Domestic Product of between 7 and 8%. 0 Holding the annual inflation rate in the range of 7 to 8%. 0 A growth in commodity exports, excluding those from mega-projects, of about 6% and, including the mega-projects, 46.5%. I TOTAL SUPPLY AND DEMAND GROWTH RATES IN VOLUME (%) - 1 2002 2003 2004 2005 TOTAL SUPPLY 16.6 11.5 5.6 13.2 TOTAL GROSS DOMESTICPRODUCT 7.4 8.1 7.2 7.7 IMPORTS 50.1 20.4 1.8 26.5 TOTAL DEMAND 16.6 11.5 5.6 13.2 CONSUMPTION 7.7 16.1 3.5 14.9 Private Consumption (by difference) 10.6 18.0 3.3 15.5 Government Consumption -12.0 0.1 5.4 9.1 GROSS CAPITAL FORMATION 52.4 -11.1 -9.9 20.4 EXPORTS 7.7 34.8 33.3 1.9 GDP AT CURRENT PRICES 10A6Meticais 85,206,789 102,753,200 124,092,784 144,206,587 IV.?.OVERALL AND SECTOR PRODUCTION Overall and sector production for 2005 indicates a growth rate of 5.7%. To attain this result, the expected performance in agriculture, mineral resources,  -21 - ECONOMICAND SOCIAL PLAN FOR 2005 manufacturing industry and transport and communications will be determinant. Excluding aluminium, production will grow at a rate of 6.3%. In fact, phase II of Mozal reached its maximum productive capacity in 2004; for 2005, an aluminium production of almost the same levels as 2004 is forecast. OVERALLAND SECTOR PRODUCTION Growth Rates in Volume (YO) - PRODUCTION 2003 2004 2005 I AGRICULTURE, LIVESTOCKAND FORESTRY 8.6 9.1 6.6 Agriculture 9.8 9.0 7.2 Livestock 17.4 12.8 5.1 Forestry -8.7 5.6 3.1 FISHERIES 11.1 -3.8 7.7 MINING INDUSTRY 31.6 215.7 41.6 MANUFACTURINGINDUSTRY 14.9 12.7 3.1 ELECTRICITY AND WATER -12.6 5.7 14.8 CONSTRUCTION -7.6 -14.6 0.2 TRADE 5.3 -0.1 6.5 REPAIR SERVICES 2.1 0.1 0.2 RESTAURANTSAND HOTELS 8.6 1.I 0.7 TRANSPORT AND COMMUNIC S 8.6 16.4 13.1 FINANCIAL SERVlCES 0.8 0.9 1.o RENT OF BUILDINGS 2.4 2.5 2.5 SERVICES TO COMPANIES 2.0 1.9 3.1 GOVERNMENT SERVICES 6.1 5.6 9.3 OTHER SERVICES 9.7 8.5 0.8 TOTAL PRODUCTION 4.8 4.6 5.7 TOTAL PRODUCTIONSWITHOUT ALUMINIUM 2.3 2.2 6.3 TOTAL PRODUCTION NO GAS OR ALUMINIUM - 2.4 1.3 5.5 TOTAL PRODUCTIONWITHOUT MEGA-PROJECTS 7.4 5.1 7.3 Without mega-projects, production will grow at a rate of 7.3%. As may be concluded, the presence of mega-projects, under construction and operating, conditions and distorts the normal behaviour of the overall production of the economy which has evolved at the rate of about 7.0%. The joint increase to be noted in agriculture, manufacturing industry and transport and communications is equivalent to about 60% of the programmed increase. All the other sectors will present a positive evolution. Worthy of note are the increases forecast in the sectors of Mineral Resources (41.6%) and Electricity and Water (14.8%). The performance of the mining sector is based on the increases in the production of the Pande-Temane gas; while increased energy production results from the normal functioning of Hidroelectrica de Cahora Bassa, after the end of rehabilitation, modernisation and automation work that  - 22 - ECONOMIC AND SOCIAL PLAN FOR 2005 began in 2003, and the expansion of the national electricity grid to the northern region and other parts of the country. The construction sector will record a reversal of its performance indicators of recent years, associated with the end to construction of major undertakings that are now operational. A. AGRICULTURE, LIVESTOCK AND FORESTRY As in the 2003/04 campaign, no dramatic climatic disturbances are forecast for the 2004/2005 agricultural campaign, and policy for the sector will remain oriented towards the reduction of absolute poverty and towards guaranteeing the food security of rural households, To this end, the family sector, given its importance in reducing levels of absolute poverty will continue to merit special attention in order to raise levels of production and productivity. The effort in this sector will be centred on promoting the sustainable use of resources, with community participation, livestock assistance, the encouragement of basic food and cash crops, making available sustainable production and post-harvest technologies, and simplification of the procedure for obtaining DUAT (Land Use Titles), with greater stress on the small producers. AGRICULTURAL PRODUCTION (Growth Rates in Volume YO) 2003 2004 2005 TOTAL 9.8 9.0 7.2 COMMERClAL 109.3 10.5 12.0 FAMILY SECTOR TOTAL 3.4 8.8 6.6 FAMILY SECTOR MARKETED 4.3 12.1 8.3 AUTOCONSUMPTlON 2.8 6.9 5.5 A growth in agricultural production is thus expected of about 7.2% overall. The commercial sector will record an increase of 12.0% resulting from the significant increase in production expected in some food crops and products for industry, notably tobacco, given the weight they have in the structure of commercial marketing. The dynamic of this sector is linked to the restructuring and rehabilitation of some productive units, particularly for sugar cane, cotton, tobacco and maize.  - 23 - ECONOMIC AND SOCIAL PLAN FOR 2005 COMMERCIAL PRODUCTIONAND FAMILY SECTOR MARKETING (Growth Rates in Volume %) 05 EXPORT PRODUCTS -4.4 10.5 16.6 Cashew nuts 27.2 -32.6 62.8 Cotton -34.8 69.9 0.0 Copra 14.7 -3.1 0.0 Sugar cane 21.9 -3.3 21.9 ICitrustea 5.0 1.6 0.0 eaf 0.9 19 3 5.8 BASIC FOOD CROPS 13.6 6.0 5.3 Maize 7.9 16.1 5.9 Unhusked rice 8.5 -5.5 7.0 Sorghum -0.4 5.1 6.4 Cassava 4.2 4.6 5.2 Shelled groundnuts 0.1 19.6 7.0 Beans 1.7 7.1 7.7 Vegetables 60.5 0.0 Onions 105.6 -10.5 9.3 PRODUCTS FOR INDUSTRY 80.5 28.4 15.6 Tobacco 73.2 68.3 22.9 Tomato 86.5 0.0 6.8 TOTAL 70.5 11.7 9.3 For the group of export products, growth of 16.6% is forecast. Thus a growth rate higher than that recorded in 2004 (10.5%) is expected. Cashew production will grow by 62.8%. To promote production of this crop, there will be continued training of producers, and development of activities to handle pests and disease, in Cab0 Delgado, Nampula, Zambezia, Inhambane, Gaza and Maputo provinces. For the group of basic food crops, growth of approximately 5.3% is forecast. In general, increases are expected in all food crops, namely grains, root crops and legumes, due to increases in the area under cultivation and in productivity. In recent years, there has been a growth rate in food crops relatively higher than the rate of expansion of the area under cultivation, which reflects improvements in productive technical efficiency, and the success of the agricultural services provided to the rural population. The production and marketing levels of maize (5.90/,) and cassava (5.2%) are worth stressing. These are the products with most weight in food crops taken as  - 24 - ECONOMICAND SOCIAL PLAN FOR 2005 a whole, and are thus fundamental in guaranteeing food security and reducing absolute poverty. For the group of products for industry, growth of 15.6% is forecast. Determinant in this is the growth recorded in tobacco production and marketing (22.9%). Dynamism in family sector marketing is expected. There are prospects for increases in all crop groups - namely export crops (18.8%), food crops (6.0%) and products for industry (12.8%). FAMILY SECTOR MARKETING (Growth Rates in Volume %) EXPORT PRODUCTS -4.7 17.3 18.8 Cashew nuts 27.2 -32.6 62.8 Cotton -27.1 79.1 0.0 Copra Sugar cane 1.4 3.7 3.0 Citrus 0.0 0.0 0.0 IBASIC FOOD CROPS 5.4 7.8 6.0 Maize 1.o 15.0 6.6 Unhusked rice 19.0 -6.5 7.5 Sorghum 0.3 5.1 6.0 Cassava 3.8 4.3 5.3 Shelled groundnuts 0.0 20.0 6.8 Beans 1.7 7.2 7.8 Vegetables 7.4 13.9 0.0 n 55.6 6.5 9.6 PRODUCTS FOR INDUSTRY 8.7 33.1 12.8 Tobacco 40.9 46.9 13.2 Tomato - 0.0 11.4 TOTAL 4.3 12.1 8.3 Despite the high figures programmed for auto-consumption (5.5%), in recent years there have been improvements in family sector marketing, and an increase of 8.3% is forecast for 2005. In the livestock sector, an overall growth rate of 5.1% is forecast.  - 25 - ECONOMIC AND SOCIAL PLAN FOR 2005 LIVESTOCK PRODUCTION(Growth Rates in Volume (YO) ITEM 2004 2005 COMM. FAM. COMM. FAM. Cattle 13.6 11.3 8.0 8.0 Pigs 0.0 4.9 4.9 4.9 Live birds 19.0 12.8 4.2 4.2 Fresh eggs 41.6 35.9 4.5 4.0 TOTAL 18.3 12.5 5.1 5.0 Key: COMM = Commercial sector; FAM = Family sector Domestic contribution to the overall supply of beef has been growing in recent years. In fact, while only 26% of beef consumption came from national cattle production in 2000, the figure rose to 58% in 2001 and to 67% in 2002. Apart from the livestock breeding programme, this change results: from a relaxation of the containment policy, thanks to the stabilisation of the herd, the ban on the entry into Mozambique of cattle from neighbouring countries due to health problems, and to the environment of stability which has made it possible to step up marketing. I LIVESTOCK NUMBERS 6,000,000 4,000,000 2,000,000 n I 1 I 1 2003 2004 2005 Cattle 1,100,000 Ii 1,250,000 1,350,000 1,354,070 1,420,000 1,490,000 ~ i Goats I 4,747,901 4,990,000 5,200,000 According to recent Agricultural Survey data (TIA 2003), in the coming years the country might reach the effective peak of about 1.5 million head of cattle recorded in the 1980s. Forestry production will grow by 3.1Oh in 2005. To secure sustainable exploitation of forestry resources, the Development Policy and Strategy for the forestry sector and the Forestry Regulations have promoted exploitation in the form of forestry concessions, thus reducing disorderly exploitation.  - 26 - ECONOMIC AND SOCIAL PLAN FOR 2005 B. FISHERIES Improvements in the system for gathering statistical data on artisanal fishing, with the adoption of the sampling method, allows us today to present a more realistic picture of the contribution made by this sub-sector to fisheries production. The production of artisanal fishing, commercial fishing and fish farming, taken as an aggregate, is forecast to rise in 2005 by 7.7%. This results essentially from the rapid growth in fish farming, and the significant contribution of artisanal fishing. FISHERIES PRODUCTION (Growth Ratesin Volume %) 2003 2004 2005 TOTAL 11.1 -3.8 7.7 COMMERCIAL -9.2 -3.2 7.4 FAMILY SECTOR TOTAL 41.6 -4.4 7.9 FAMILY SECTOR MARKETED 53.8 -5.5 8.0 AUTO-CONSUMPTION 30.8 - 7.7 ARTISANAL FISHING Growth Rates in Volume (%) - Lobster 10.0 0.0 0.0 Crab -55.6 -57.9 0.0 Deep water prawns 0.0 0.0 0.0 Fresh and frozen fish 66.7 -4.3 8.5 Kapenta 0.0 0.0 0.0 By-catch 0.0 0.0 0.0 Prawns * -8.3 -26.3 16.3 Crayfish 0.0 0.0 d octopus - 0.0 - -13.0  - 27 - ECONOMIC AND SOCIAL PLAN FOR 2005 2003 2004 7005 Lobster 7.7 100.0 150.0 Crab -50.4 175.0 -43.2 Deep water prawns -9.7 -28.2 2.8 Fresh and frozen fish 68.0 -53.1 112.3 Kapenta 16.2 67.6 -0.1 By-catch 0.6 -8.5 -2.6 Prawns * -17.5 9.3 -0.4 Crayfish 37.5 20.0 d octopus - 73.5 -13.6 * Includes fish farming Commercial prawn production will record a slight decline (-0.4%), despite growth in the production of farmed prawns, resulting from the expansion of production areas in Zambezia, Sofala and Cab0 Delgado. The traditional prawn catch is forecast to reach 8,000 tonnes, against 8,085 tonnes in 2004. In general, the fisheries produce export plan is about 15,730 tonnes, against 20,504 in 2004. It should be noted that there will be continued increase in exports from fish farming, with the start of the commercial catch and export of live farmed prawns, to be used as reproducers for fish farming production. C. EXTRACTIVE INDUSTRY Production from extractive industry has been showing significant levels of growth, with the alteration of the production structure with new products gaining in weight. The plan for 2005 forecasts a growth rate of 41.6%. This growth is based on the increases forecast in the production of natural gas at Pande-Temane, and limestone, riolites and tantalite, in Maputo, lnhambane and Zambezia provinces. In the current productive structure, these products represent about 80% of national mining production. Gas is the mining product that creates the greatest production value in this sector. In the search for sustainable exploitation of natural gas, additional reserves of gas have been located in areas adjacent to the Temane field. Conclusion of evaluating the reserves is expected this year. Tantalite production has increased with the opening of the new mine at Naquissupa, and with the re-activation of old mines. The reactivation of the Muiane mine is expected in 2005.  - 28 - ECONOMIC AND SOCIAL PLAN FOR 2005 Extension of the national electricity grid to Ancuabe, forecast for late 2005, opens good prospects for reactivating graphite production. MINERAL RESOURCES Growth Rates in Volume - . I Coal -15.6 -55.0 58.6 Bauxite 29.3 -23.9 17.0 Graphite 0.0 0.0 0.0 Unworked bentonite 0.0 0.0 21.8 Worked bentonite 18.0 -15.5 8.1 Sieved bentonite 57.9 -32.5 35.3 Activated bentonite 0.0 0.0 0.0 Marble sheets 2.5 33.6 12.2 Marble blocks -0.2 36.5 10.2 Garnets -61.3 511.O 76.9 Lapidatedstones 0.0 0.0 0.0 Gold 271.6 -10.8 16.1 Aquamarines -69.4 132.1 3.9 Tourmalines 370.4 170.2 1.o Tantalite 302.3 277.4 4.6 Beryl 44.2 -65.1 112.5 Sand 72.4 4.2 14.4 Limestone 3.6 18.2 5.4 Riolites -9.6 5.8 3.6 Granite -19.5 -3.4 4.6 Dumortiorite 0.0 182.5 10.6 Natural gas 4.1 91405.1 91.0 TOTAL 31-6 715.7 41-6 1 Coal production is expected to continue recording strong signs of recovery (58.6%) once the problems concerned with the productive process at the Chipanga XI mine are solved, stimulated by the rise in coal prices, with increased demand on the world market. The levels of production of marble in sheets and blocks have been unstable due to several factors, notably the existence on the market of alternative products, such as tiles and granite imported from South Africa. Increases in production are expected in 2005, with the installation of new equipment in the quarries, and with a reliable energy supply to the quarries, thanks to the expansion of the national electricity grid to the north of the country. Garnet production will record growth of 76.9% in 2005. Privatisation of the company SOMEC, E.E., which holds the exploitation rights over this mining area, is under way.  - 29 - ECONOMIC AND SOCIAL PLAN FOR 2005 The production of granite, bauxite, bentonite and dumortiorite has faced problems in finding markets. These products are conditional on orders and supply contracts previously signed with clients. In 2005 efforts will be pursued to rehabilitate the bentonite mine at Boane which was destroyed by the 2000 floods. Small scale mining production (gold, tourmalines, aquamarines and quartz) has recorded positive results in the last 3 years, and positive levels of growth are also expected in 2005. The main supports for the results in gold production are the performance of licensed operators in Nampula, Zambezia, Manica and Niassa, government support for artisanal operators, and rehabilitation of access routes to the gold production areas in Niassa. D. MANUFACTURING INDUSTRY In 2005 industry will continue to be one of the determinant factors for economic development. Growth in commercial industrial production of 3.1% is forecast. Mozal will continue producing at its full installed capacity, and its production is forecast as stationary (0.5%) in comparison with 2004. MANUFACTURING INDUSTRY Growth Rates in Volume (YO) - . . Paper and printing Chemical products Non-metalIic minerals C T O T A ~ 73.7 17.4 The food, drink and tobacco industries are the major pivot for growth in the country's manufacturing industry because, on the one hand, of the dynamism they have shown in recent years, and on the other, because of the weight they have in the overall structure of industrial production.  - 30 - ECONOMIC AND SOCIAL PLAN FOR 2005 Improvement in the performance of the drinks industry is expected, with the rehabilitation and installation of new equipment in the company Cervejas de Moqambique (Beers of Mozambique). The timber and furniture industries, after strong signs of recovery in 2003, with the increase in demand for school furniture, are forecast to show stationary behaviour in 2005, because the main productive unit (NOVARTE) is facing financial problems. The behaviour of the paper and printing industries has been unstable over the last 3 years. After presenting a sharp rate of growth in 2002, in 2003 they recorded declines in production. The substantial performance registered in 2004 does not allow prospects for high rates of growth, although some sign of recovery in this area is envisaged. Thus a slight growth rate (1.3%) is forecast in 2005. The chemical, rubber and plastics industry has shown oscillations in its production levels, due to the presence on the market of similar products imported at low cost, with greatest impact on the manufacture of chemical products and plastic materials. In the area of basic engineering, a growth of only 0.5% is forecast, explained by an increase in aluminium production from the 547,606 tonnes produced in 2004, to 550,344 tonnes. Excluding aluminium, this sector will grow by 2.3%, despite the entry of two new companies, Memoz and Ferpinta Moqambique. The first is dedicated to metallurgical services, and the second to producing zinc sheeting. Some constraints remain in the industrial sector, concerning the poor quality of the electricity supplied, the high costs of production caused by the excessive cost of electricity, water, customs charges, obsolete technologies and limited access to bank credit, which result in low levels of production and competitiveness of some industrial units. An improvement in the quality of the electricity supplied to industries in northern Mozambique is expected in 2005, thanks to the expansion of the national electricity grid in this part of the country. On the other hand, it is expected that implementation of Ministerial Diploma No 99/2003, of 13 August, that approves the Customs Regulations for manufacturing industry, will stimulate the areas covered, through reducing customs charges on imported raw materials. E. ELECTRICITY AND WATER The energy and water sector is forecast to grow by 14.8%. This performance is based on the conclusion of the modernisation and automation work at Hidroelectrica de Cahora Bassa, which will allow the normal operation of the  -31 - ECONOMICAND SOCIAL PLAN FOR 2005 generators, and hence increased production of electricity for export both in a regime of firm energy and one of peak power. In 2005, the expansion of the electricity grids to 20 district capitals and the installation of solar-powered systems in 10 localities are envisaged. Water production will continue to accompany the additional needs created by rural and urban population growth, which allows a forecast of a slight growth of 2.5%. F. CONSTRUCTION In the area of construction and assembly, a reversal in the trend of the production indicators recorded in recent years is expected, which will represent a return to the normal functioning of this sector, after the conclusion of building work on Phase II of Mozal and of the Pande-Temane gas pipeline. In 2005, continued promotion of the heavy sands projects of Moma, Chibuto and Moebase is forecast, with a view to attracting larger volumes of investment. ,209000T--' 15,000 10,000 5,000 0 I Road rehabilitation 827 819 1,091 Periodicmaintenance 396 514 1635 Routine maintenance 10,592 9,653 14,343 Excluding the mega-projects sub-sector, the construction sector will show a trend to growth compared with the levels of 2004. The work programmed in the roads area covers a total distance of 17,069 kms against 10,988 kms in 2004. G. TRADE In the trade area, the Plan for 2005 forecasts a growth rate of 6.5%. This growth is based on the envisaged growth in production of the real sector of the economy. Also forecast is an increase in commodity imports to feed the  - 32 - ECONOMIC AND SOCIAL PLAN FOR 2005 commercial flow of the economy. However, the accelerated increase forecast in the total volume of imports, as seen on the balance of payments, is due to demand from the mega-projects, and these provide no profit margin to domestic' economic agents, since their imports go through no transactions internally. H. RESTAURANTSAND HOTELS The current pace of investments in the sector, and particularly the expansion in the number of beds and of hotels and similar establishments, is opening good prospects for the continuous growth of the sector. The entry into operation in 2003 of accommodation establishments classified with three, four and five stars, sustains the 2005 production plan. The performance envisaged is based on the forecast increase in tourism revenue in the balance of payments. 1. TRANSPORT AND COMMUNICATIONS Production for 2005 indicates that the sector will reach an overall growth rate of 13.1%. Road transport (8.4%) and communications services (37.7%) will contribute significantiy. TRANSPORT AND COMMUNICATIONS Growth Rates in Volume (YO) - 7003 7004 7005 I Rail transport 68.8 13.6 16.6 Road transport -4.2 19.2 8.4 Transport by pipeline -13.1 3.5 15.5 Maritime transport and coastal shipping 171.7 61.4 9.8 Air transport 156.9 238.2 -2.2 Services related with Transport 29.3 -47.0 4.0 services 7 8 15.7 37.7 ITOTA~ 8.6 16.4 13.1 I The growth in road transport results from the increase recorded in public and semi-collective passenger transport, caused by the growth of the country's cities and towns, the encouragement of licensing of vehicles that have more than 25 seats, and the acquisition of new public buses. Road freight transport has been conditioned by the needs imposed by the entire production and marketing of the real sector of the economy. In 2005, the volume  - 33 - ECONOMIC AND SOCIAL PLAN FOR 2005 of freight carried by roads will be relatively stagnant, compared with the amounts transported in 2004, associated with the freight transport recorded during the construction of the Pande gas pipeline. The telecommunications performance is due to the expansion of the fixed and mobile telecommunications networks. Of particular note is the aggressive stance of the mobile and fixed phone operators as they try to expand their markets. Although air traffic has been stimulated with the opening of new points of entry to the country, the implementation of the new civil aviation policy, the simplification of procedures for the licensing and entry of aircraft, and the increase in tourism, it will experience a decline in 2005, reflecting the fact that this year no major international events are foreseen, like those that drove international passenger traffic in 2004. IV.2. MONETARY AND EXCHANGE SECTOR The monetary and exchange policy to be pursued in 2005 is guided by the final objectives of government economic policy, in terms of economic growth, the control of inflation, and equilibrium of the balance of payments. In 2004 the monetary programme envisaged an annual growth in the Money Supply of 15%, but by the end of December it had only grown by 6.1%, influenced, essentially, by the appreciation of the metical against the US dollar. For 2005 an annual growth of 14.5% in the Money Supply is forecast, Gross International Reserves should cover between 5 and 6 months of imports of goods and services, and the programme makes space for a growth in Credit to the Economy in line with the nominal growth in GDP. Interventions on the interbank monetary and exchange markets will be prioritized to regulate the behaviour of the monetary aggregates and thus guarantee the inflation objective. In the area of strengthening the financial system, the following are envisaged: e Concluding the timetable for the introduction of International Financial Reporting Standards (IFRS) in the institutions under its supervision; e Finalising the study on the implications of the transition to IFRS on tax policy; e Implementation of International Accounting Standards (IAS); e Strengthening the institutional capacity of the Bank of Mozambique and of other regulatory authorities through issuing and implementing regulations  - 34 - ECONOMIC AND SOCIAL PLAN FOR 2005 on the Law of Credit Institutions and Financial Companies (LICSF) and the regulation on micro-finance; 0 Implementation of the strategy of selling the state's shares in BIM. lV.3. INFLATION The accumulated rate of inflation, from January to December 2004, was 9.3% according to the Aggregate Price Index of the three main cities: Maputo, Beira and Nampula (MABENA). Breaking the figure down by cities, one notes that Nampula had slightly higher accumulated inflation with 11.9%, while Maputo city reached 9.1Oh and Beira 8.5%. PRICE INDEX MABENA BASE DEC 1998 = 100 - - JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC INDEX: 2002 141.4 144.0 142.9 141.7 140.6 141.4 142.8 143.7 144.9 145.7 148.0 151.7 2003 153.1 155.5 158.4 159.8 160.6 160.3 160.9 161.3 161.9 163.1 164.4 169.0 2004 174.1 175.7 177.5 178.9 179.2 178.7 179.3 179.1 179.2 180.2 181.2 184.7 I MONTHLY VARIATION (%): 2002 1.6 1.8 -0.7 -0.9 -0.7 0.6 1.0 0.6 0.9 0.6 1.5 2.: 2003 0.9 1.6 1.8 0.9 0.5 -0.2 0.4 0.3 0.4 0.7 0.8 2.E 2004 3.0 0.9 1.0 0.8 0.2 -0.3 0.3 -0.1 0.0 0.6 0.6 1.: YEAR ON YEAR GROWTH RATE (%): 2002 24.5 25.9 24.0 21.5 19.7 18.9 17.2 14.7 13.9 11.4 9.6 9.C 2003 8.3 8.0 10.8 12.8 14.2 13.3 12.6 12.3 11.7 11.9 11.1 11.4 2004 13.7 13.0 12.1 11.9 11.6 11.5 11.4 11.1 10.6 10.5 10.2 9.: IACCUMULATED GROWTH RATE DURING THE YEAR (yo): 2002 1.6 3.5 2.7 1.8 1.1 1.6 2.7 3.2 4.2 4.7 6.4 9.0 2003 0.9 2.5 4.4 5.3 5.8 5.6 6.0 6.3 6.7 7.5 8.4 11.4 2004 3.0 3.9 5.0 5.8 6.1 5.7 6.1 6.0 6.0 6.6 7.2 9.3 Source: NationalStatistics Institute The fall in inflation is linked, among other things, to the performance of the real sector of the economy, the moderate expansion of the money supply, and the favourable evolution of the public accounts. One should also mention the impact of the appreciation of the Metical against the Rand and the US dollar, which softened the pressure from the group of non-food commodities, associated with the continual rise in oil prices on the international and domestic markets. Although it declined by -0.1% in June, and was stationary in July, when looked at in accumulated and annual terms the Maputo city price index rose by 9.1% by the end of the year, rather than the 11% programmed.  - 35 - ECONOMIC AND SOCIAL PLAN FOR 2005 Unlike what happened in 2003, the evolution of inflation over the period has been strongly influenced by the index of non-food commodities, which, in accumulated terms, increased by 4.8%. Of particular importance was housing which by December had risen by 22.4%. These increases were associated with the continual rise of oil prices on the international and domestic markets, and the adjustment upwards of some prices fixed administratively. One should also mention that, albeit on a smaller scale, the depreciation of the metical against the rand had some influence on the evolution of the index, particularly in the behaviour of food prices. PRICE INDEX -MAPUTO BASE DEC 1998 = 100 - JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC INDEX: 2002 144.1 146.0 145.0 145.4 145.6 147.1 148.6 149.4 149.6 150.2 153.0 157.5 2003 157.1 160.7 164.9 166.9 169.7 168.3 168.3 169.4 170.6 172.3 173.8 179.2 2004 184.4 185.3 187.1 189.6 190.8 190.7 190.7 189.8 189.5 190.6 192.7 195.5 MONTHLY VARIATION (%): 2002 -0.2 1.3 -0.7 0.3 0.1 1.1 1.0 0.6 0.1 0.4 1.9 2.9 2003 -0.3 2.3 2.6 1.2 1.6 -0.8 0.0 0.6 0.7 1.0 0.9 3.1 2004 2.9 0.5 1.0 1.3 0.6 -0.1 0.0 -0.5 -0.2 0.6 1.1 1.5 YEAR ON YEAR GROWTH RATE (%): 2002 22.9 24.9 23.2 22.2 19.5 18.3 16.6 15.2 14.3 10.5 8.9 9.1 2003 9.0 10.1 13.7 14.8 16.5 14.4 13.2 13.3 14.0 14.7 13.6 13.8 2004 17.4 15.3 13.5 13.6 12.5 13.3 13.3 12.0 11.1 10.6 10.8 9.1 ACCUMULATED GROWTH RATE IN THE YEAR (%): 2002 -0.2 1.2 0.5 0.7 0.9 1.9 3.0 3.5 3.6 4.1 6.0 9.1 2003 -0.3 2.0 4.7 6.0 7.7 6.9 6.9 7.5 8.3 9.4 10.4 13.8 2004 2.9 3.4 4.4 5.8 6.5 6.4 6.4 5.9 5.7 6.3 7.5 9.1 Source: NationalStatistics Institute  - 36 - ECONOMIC AND SOCIAL PLAN FOR 2005 PRICE INDEX BEIRA BASE DEC 1998 = 100 - - JAN FEB MAR APR MAY JUN JUL AUG SEP OUT NOV DEC INDEX: 2002 146.3 147.7 146.2 142.1 140.8 142.3 143.5 144.9 148.0 149.0 150.3 151.1 2003 153.4 153.5 155.9 157.2 158.5 160.5 161.8 161.4 161.2 162.3 163.6 166.4 2004 171.2 174.4 176.4 176.5 175.9 174.9 176.6 177.3 177.6 178.4 178.2 180.5 MONTHLY VARIATION (%): 2002 5.1 0.9 -1.0 -2.8 -0.9 1.0 0.9 1.0 2.1 0.7 0.9 0.5 2003 1.6 0.1 1.5 0.9 0.8 1.3 0.8 -0.2 -0.1 .0.7 0.8 1.7 2004 2.9 1.8 1.2 0.1 -0.3 -0.6 1.0 0.4 0.1 0.5 -0.1 1.2 YEAR ON YEAR GROWTH RATE (%): 2002 28.4 25.5 22.9 17.7 18.2 18.9 17.3 14.2 14.8 14.9 11.7 8.: 2003 4.9 4.0 6.6 10.6 12.5 12.9 12.8 11.4 8.9 8.9 8.8 10.2 2004 11.6 13.6 13.2 12.3 11.0 9.0 9.1 9.8 10.1 9.9 9.0 8.: I I ACCUMULATED GROWTH RATE INTHE YEAR (%): 2002 5.1 6.1 5.0 2.1 1.2 2.2 3.1 4.1 6.4 7.1 8.0 8.: 2003 1.6 1.6 3.2 4.0 4.9 6.3 7.1 6.9 6.7 7.4 8.3 10.2 2004 2.9 4.8 6.0 6.1 5.7 5.1 6.1 6.5 6.7 7.2 7.1 8.5 I Source: National Statistics Institute I PRICE INDEX - NAMPULA - BASE DEC 1998 = 100 JAN FEB MAR APR MAY JUN JUL AUG SEP OUT NOV DEC INDEX: 2002 125.4 133.2 132.6 131.4 126.7 123.9 125.4 125.1 126.3 127.2 129.2 136.1 2003 141.4 144.3 143.6 142.9 136.9 135.2 136.7 136.8 137.2 136.6 137.6 142.9 2004 148.3 149.1 150.3 150.5 150.1 149.3 149.8 150.7 151.8 152.9 152.7 160.C MONTHLY VARIATION (%): 2002 1.4 6.2 -0.5 -0.8 -3.6 -2.2 1.2 -0.3 1.0 0.7 1.6 5.4 2003 3.8 2.1 -0.5 -0.5 -4.2 -1.2 1.1 0.1 0.3 -0.4 0.7 3.8 2004 3.8 0.6 0.8 0.1 -0.3 -0.5 0.4 0.6 0.7 0.7 -0.1 4.; YEAR ON YEAR GROWTH RATE (%): 2002 23.2 32.0 30.8 29.1 25.3 22.3 20.6 14.7 11.5 8.1 7.9 10.0 2003 12.7 8.3 8.3 8.7 8.0 9.1 9.0 9.4 8.7 7.5 6.5 5.0 2004 4.9 3.3 4.7 5.3 9.6 10.4 9.6 10.2 10.7 11.9 11.0 ll.! ACCUMULATED GROWTH RATE IN THE YEAR (%): 2002 1.4 7.7 7.1 6.2 2.4 0.1 1.3 1.1 2.1 2.8 4.4 10.0 2003 3.8 6.0 5.5 5.0 0.5 -0.7 0.4 0.5 0.8 0.4 1.1 5.c 2004 3.8 4.4 5.2 5.3 5.0 4.5 4.9 5.5 6.3 7.0 6.9 ll.! ISource: National Statistics Institute Considering the results achieved in 2004, the rate of inflation projected for 2005 is between 7 and 8%  - 37 - ECONOMIC AND SOCIAL PLAN FOR 2005 lV.4. BALANCE OF PAYMENTS Commodity exports in 2005 are forecast to reach 1,529 million dollars, which, compared with 2004, will represent a growth of about 5%. Exports from the mega-projects continue to dominate the range of goods traded by Mozambique on world markets, contributing with about 1,132 million dollars. 2002 2003 2004 2005PL TRADE BALANCE -582.7 -627.8 -302.0 -629.0 Exports (fob) 680.2 1043.9 1451.9 1529.0 Of which: Mega-projects 436.9 680.9 1048.5 1132 Growth Rate (YO) 53.5 39.1 5.5 Imports (cif) -1262.9 -1671.7 -1753.9 -2158.0 Of which: Mega-projects 404.2 -303.6 -279.7 -460.0 For their part, commodity imports in 2005 are forecast to reach 2,158 million dollars, of which 460 million are imports by the mega-projects. In 2005 it is expected that the deficit on the balance of services will worsen by about 74% compared with the previous year - that is, that the deficit will rise from 279.7 to about 486 million dollars. BALANCE OF SERVICES IO"6 USD - I 2002 2003 2004 2005PL BALANCE -151.8 -272.6 -279.7 -486.0 Revenues 454.3 303.9 255.6 407.0 Expenditure -606.1 -576.6 -535.2 -893.0 As for the entry of foreign exchange into Mozambique to finance investment, in 2005 this may undergo a decline of about 15% compared with the previous year, influenced by a decline in private loans, taking into account that an increase in direct foreign investment is expected. 2002 2003 2004 2005PL Private loans (disbursements) 791.I 383.5 420.8 227.2 Direct foreign investment 156.3 336.7 131.9 242.9 TOTAL 947.4 720.2 552.7 470.1  - 38 - ECONOMIC AND SOCIAL PLAN FOR 2005 V. MAIN DEVELOPMENTS BY SECTOR V.1. SOCIAL AREA A. EDUCATION In the area of Education in 2005, there will be continuing priority on expanding access and improving the quality of education. Strengthening institutional capacity at the various levels of educational administration will be a further priority. General Education Expansion of Access to Education In 2005 the number of pupils in General Education is forecast to grow by about 18% in comparison with 2004, thus maintaining the growth trend recorded in previous years. By levels of education, sharper growth is forecast in the number of pupils in primary education. In 2005 it is envisaged that the school network will grow by about 7% compared with 2004. The construction of schools at low cost will be promoted in 2005 with a view to expansion of access. Thus the pilot phase of the School Construction at Low Cost Programme will be undertaken in four provinces, namely Cab0 Delgado, Nampula, Tete and Zambezia. General Education:PuDil numbers in 200312005 Schools Pupils Level Achieved Achieved Planned Evolution (%) Achieved Achieved Planned Evolution(%) 2003 2004 2005 2004 2005 2003 2004 2005 2004 2005 EPI 8,071 8,373 8,761 3.7 II4.6 2,825,971 3,071,564 3,620,850 8.7 II 17.9 EP2 950 1,116 1,352 17.5 21,l 355,618 409,279 512,272 15.1 25.2 ESGI 125 140 153 12.0 9.3 141,795 168,798 187,066 19.0 10.8 ESG2 29 30 35 3.4 16.7 18,291 21,350 23,140 16.7 8.4 Total 9,175 9,659 10,301 5.3 6.6 3,341,675 3,670,991 4,343,328 9.9 18.3 Pre-school Education In the area of Pre-school Education, the following activities will be undertaken in 2005: Develop and introduce experimentally training courses for monitors for the "Community Creches";  - 39 - ECONOMICAND SOCIAL PLAN FOR 2005 0 Develop the Parental Education Programme, through the radio, and of the Literacy and Adult Education programmes, in order to ensure care and education for children. Special Education In the area of Special Education, the inclusion of children with special educational needs, children with motor disabilities, and blind and deaf children will continue. The rehabilitation of two special schools will also be undertaken. Primary Education About 3.6 million children are forecast to attend First Level Primary Education (EPI), which is an increase of 17.9% compared with 2004. These pupils will attend 8,761 schools, which is an increase of 5% on the 2004 figure. In terms of the school coverage rate, the net EPI enrolment rate is forecast to rise from the current 75.6% to 79% and the gross admission rate should rise by 19.1%, from the current 137.6% to 156.7%. As for gender, it is expected that net EPI enrolment rate of girls in 2005 will reach 77% (3.8% more than in 2004), and that the percentage of EPI pupils who are girls will rise from the current 45.9% to 47%. At the same time, and as part of implementing the Gender Strategy in Education, the gender parity plan of action and the strategy to care for and assist orphans and vulnerable children will be implemented. In Second Level Primary Education (EP2), the number of pupils in 2005 is forecast to grow by about 25% compared with 2004. That is an increase of a further 102,993 pupils on the 409,279 pupils enrolled in 2004. Thus the trend to strong growth in this level of education is continuing. That growth has been under way since 1995, and particularly since 2000. As a result, the gross enrolment rate in this level will rise from the current 41-0%to 51.I % in 2005. As for schools, it is envisaged that a further 236 schools will provide this level of education in 2005, thus increasing the number of schools teaching EP2 from the current 1,I16 to 1,352. In terms of entry, 216,700 pupils are forecast to enter 6th grade for the first time in 2005, which is a rise of 15.2% compared with the 2004 figure. The gross admission rate will rise from the current 37.5% to 43.1% in 2005, thus maintaining the growth trend noted since the 1995 school year.  - 40 - ECONOMIC AND SOCIAL PLAN FOR 2005 Secondary education About 187,1001 pupils are forecast to attend the 1st Cycle of Secondary Education (ESGI) in 2005, which is a growth of 10.8% when compared to the figures observed in 2004. These pupils will attend a total of 153 schools, which is an increase of 13 on the number of schools which taught this level of education in 2004 (140 schools). As for the Second Cycle of Secondary Education (ESG2), in 2005 about 23,100 pupils will attend these grades, which is a increase of 8.4% on the 2004 figure (21,400 pupils). This level of education will be taught in 35 schools, five more than in 2004. Distance Learninq 0 Implementation of the Secondary Education Distance Learning Project (PESD) and its expansion to a further 5 districts in Nampula province; 0 Development of a plan to implement the pilot 11th/l2th grades project, under the Distance Learning in Mozambique strategy; 0 Establishment of the National Distance Learning Institute (INED) and of the national network of Provincial Distance Learning Centres; Development of strategies to improve the quality of distance learning programmes; Training the staff involved in distance learning; Development of a joint programme with the UP for training secondary school teachers through distance learning; 0 Registration of 5,000 teachers for the mid-level teacher training course by correspondence; Registration of 1,625 new teachers on the basic (7'h+3) teacher training course by correspondence; Teacher traininq The training of the teaching staff will continue in 2005, in the framework of the efforts under way in the education system to raise the teachers' professional qualifications.  -41 - ECONOMICAND SOCIAL PLAN FOR 2005 During 2005, there will be a reflection on teacher training strategy, seeking to upgrade teachers at all levels so as to respond to the imperatives of Technical and Professional Training. Thus it is expected that in 2005 a total of 5,541 students will attend the 7th+3 teacher training courses (CFPPs), slightly less than the number attending in 2004 (5,853), which is a decline of -5,3%. This course will be taught in 11 colleges located in all the provinces except Maputo City. As for the mid-level teacher training courses (IMAPs), it is envisaged that in 2005 a total of 4,057 students will attend the 10 existing IMAPs, which is a slight growth, of 0.4%, on the number of students registered in 2004. Achieved Achieved Planned Evolution(%) Level 2003 2004 2005 2004 2005 CFPP's (Basic) - Total students 5,193 5,853 5,541 12.7 II -5.3 IMAP's (Mid-level) - Total students, day course I 3.841 1 4.040 1 4,057 1 5.2 1 0.4 1 IMAP's (Mid-level) - Total students, night course 2,243 2,259 31.3 0.7 Total 10,742 12,136 11,857 13.0 -2.3 Source: MINED In-service teacher training Continue the "CRESCER" programme of in-service teacher training; 0 Undertake national programmes of continuous professional development for teachers and trainers at all levels based on the CRESCER experience. Technical and Professional Education In this educational sub-system, it is envisaged that in 2005 elementary technical education will be taught in 11 schools with a total of 1,717 students, which is an increase of 35.4% on the 2004 figure (1,268 students). In 2005, the basic level day course will be attended by a total of 20,316 students, an increase of 2.2% on the figure for 2004 ( I9,878 students). The mid-level day course will be attended by 3,917 students, which is a rise of 11.4% compared with the figure for the current academic year (3,516 students). In the field of culture, a reflection will be undertaken seeking to include the Arts Schools in the National Education System.  -42 - ECONOMICAND SOCIAL PLAN FOR 2005 Adult Education In the area of literacy and adult education, it is envisaged that in 2005 a total of 810,OO students will attend the 1st and 2nd years, which is an increase of 50.7% on the number observed in 2004 (537,600 students). Of this number, 645,900 will be enrolled in the normal literacy programmes, and the rest (164,100) will be included in literacy activities via radio. The number of units that it is forecast will teach this level of education is 6,347, a much larger number than the 5,288 that existed in 2004. For the 3rdyear it is proposed that in 2005 a total of 189,800 students will attend, which is a growth of 53.9% on the number observed in 2004 (123,300 students). Achieving the above targets will rely on the participation of civil society, whose support has been important, particularly in Non-Formal Education, which involves programmes of improving the living conditions of citizens, and thus contributing in creating opportunities for reducing absolute poverty. With regard to the analysis of effectiveness, for the first time in the country, a data base and instruments for gathering and treating data in this area will be used. lmprovinq the Quality of Education With the purpose of improving the quality of education, the following are planned for 2005: a Implement the new curriculum nationally in 2nd,4th and 7thgrades; a Continue the process of transforming the curriculum of General Secondary Education; a Reach an EPI finishing rate of 48%; a Reduce the EPI repetition rate to 15.6%; a Reach an EPI finishing rate for girls of 41%; a Adopt the new curriculum in the teacher training institutions (CFPPs and IMAPS); a Establish the comprehensive in-service training programme, serving the needs of 40% of EPI and EP2 teachers; a Implement in all public schools the Direct Support to Schools programme; a Set up new ZIPSand continue revitalising those that already exist; a Distribute the free school text books and other education resources; and a Continue school building activities. In the area of school sports and health, the following activities will be prioritised:  -43 - ECONOMIC AND SOCIAL PLAN FOR 2005 8 Hold the 7th National School Sports Festival; 8 Distribute first aid medical kits in 10 provinces, in order to help improve the health of children at school; and 8 Remove parasites from EPI pupils in Gaza and Inhambane provinces and in Muanza and Dondo districts in Sofala. In the HIV/AIDS area, the following activities will be undertaken: Expand the multi-sector programme on Sexual and Reproductive Health for adolescents and young people to 2 more provinces (Niassa and Inhambane). The programme will thus be present in 8 of the country's provinces; Introduce and implement a new prevention programme entitled "Basic Life Skills Package" in 3 provinces (Zambezia, Tete, Cab0 Delgado); Implement the radio programme "World without Secrets" in 3 provinces (Zambezia, Tete e Cab0 Delgado); Draft and distribute a manual on School Health and HIV/AIDS, along with a specific fund for activities on these topics, for all basic education schools (together with the Direct Support to Schools programme); Implement the 2nd phase of the programme for school directors entitled "Managing Schools in the context of HIV/AIDS"; Print and distribute 80,000 copies of the brochure "HIV/AIDS and You"; Introduce the pilot programme of support for orphaned and vulnerable children (COV's), benefiting about 50,000 children; Hold a national competition aimed at students on preventing and mitigating the effects of HIV/AIDS; Select and introduce indicators on the impact of HIV/AIDS on the sector, in the statistical survey system in force; and Train provincial focal points and working groups throughout the country in matters of HIV/AIDS, management and planning. Institutional Development In the area of strengthening the system's administrative and management capacity, priority will be given to training school directors and managers of the system at provincial and district level and developing partnerships with civil society.  - 44 - ECONOMICAND SOCIAL PLAN FOR 2005 2005 will see the start of implementing the Education Strategic Plan (PEE) for the period 2005-2009. To ensure that the funds allocated to the sector are fully disbursed in due time, expenditure reports will be drawn up for analysis at the annual PEE review meeting. In the area of involving the community in Education, the School Councils Manual will be distributed, and provincial and district teams will be set up to deal with the functioning of the School Councils. Furthermore, the education management documents will be revised and enriched, at school, district, provincial and central levels, seeking to improve the circulation of information and the taking of decisions. In the human resource area, challenges for the sector in 2005 are to finish regularising the pending cases of staff not yet formally in the system, appoint to effective positions staff who have concluded academic levels, but whose placing in the career structure was not changed earlier for lack of coverage in the budget, and upgrade the financial managers who deal with processing staff wages. HIGHER EDUCAT10N In 2005 higher education will continue to prioritise development of a work force capable of responding scientifically and technologically to the major challenges of the country's economic development. Special attention will be paid to expanding access to higher education through polytechnics in strategic areas for national development and in provinces where higher education institutions do not yet exist, to improving the quality of the courses given and to expanding education opportunities from citizens outside Maputo through expanding the higher education institutions. To achieve these objectives, the following activities will be undertaken: In improving the qualitv and relevance of higher education 0 Establish the national system of accumulating and transferring academic credits; Set up the national accreditation, assessment and quality guarantee system; 0 Introduce and monitor implementation of internal assessment and quality guarantee mechanisms in the higher education institutions; 0 Define and approve staff statutes in public higher education; 0 Train teaching staff through strengthening the existing programmes, prioritising the training of teachers for secondary education, which is determinant for the quality of this education and for the professional  - 4 5 - ECONOMICAND SOCIAL PLAN FOR 2005 orientation of th'e students; Set up a scholarship fund in order to promote the opening, consolidation and growth of post-graduation programmes; Improve coordination between the various levels of education as one way of guaranteeing quaIity; Promote initiatives and/or finance activities to improve quality in the higher education institutions (QIF -Quality Improvement Fund); Conclude the definition of a Policy of Access'to Public Higher Education; Make supervisory visits to public and private higher education institutions; and Harmonise academic degrees at SADC level. Expand access to higher education with equity throuqh: 0 Start implanting higher polytechnic institutes in Gaza, Manica and Tete; Continue implanting distance learning with the creation of INED; Prepare the establishment of the National Scholarship Fund. Improve administrative and financial management of the public hiqher education institutions throuqh: Defining a Policy of Public Funding for Higher Education; Training staff of the public higher education institutions in the areas of administration and management; Promoting the financial and patrimonial autonomy of the public institutions; Make the PEES (2nd Phase) operational with the involvement of all public and private higher education institutions. Develop scientific research in the hiqher education institutions throuah: Promoting research activities in post-graduate programmes in the higher education institutions in areas of knowledge that are important for national development, and for poverty reduction, particularly in the fields of education, agriculture, health, fisheries, energy, water, biotechnology, agro-processing, the environment, among others. Contribute to the transfer of technoloav and innovation throuah: Promoting the role of educational institutions in disseminating science and technology, for example, through scientific conferences and publications.  - 4 6 - ECONOMIC AND SOCIAL PLAN FOR 2005 As for the specific activities to be undertaken in 2005 by the public higher education institutions, the following are envisaqed: Eduardo Mondlane University(UEM) So that the education provided may attain excellence, and as a result of the curriculum reform under way, the UEM in 2005 will continue to prioritise the introduction of new methods of teaching and assessment, updating the libraries and improving educational resources with the support of information technologies. Thus, to achieve the objectives defined, the following are envisaged: Teaching-Learning 0 Finance activities that seek to improve the admission system; 0 Introduce systems of credit and assessment of teachers by students; 0 Adjust the curricula to the introduction of the credits system; 0 Introduce student-centred teaching methods; 0 Produce material to publicise courses and to advise candidates; 0 Prepare the new pedagogic regulations and other pertinent legislation; 0 Assess the masters' courses; 0 Equip and computerise the libraries; 0 Equip the laboratories; 0 Undertake activities linked to curriculum reform; 0 Continue the upgradinghraining of teachers at the pedagogic and post- graduate level; and 0 Support the opening of new courses (Higher School of Marine Sciences and Oceanography in Quelimane). Research Quality in education imposes a greater dynamic in research, which should capitalise on the constant increase of teachers doing post-graduate work and on the creation and development of centres of excellence. Thus, in the research area, and to ensure excellence and quality, the following are envisaged: 0 Finance 15 new research projects;  - 4 7 - ECONOMICAND SOCIAL PLAN FOR 2005 0 Hold the 4th research seminar; 0 Set up a working group to formulate research policy; 0 Hold monthly public lectures on results from the work undertaken and proceed to define lines of research; and 0 Increase the participation of UEM teachers and researchers in international scientific events. Extension Extension is one of the vital components of the UEM's mission. In this context, the University possesses support centres, one of which is the Judicial Practice Centre of the Law Faculty, which provides legal assistance to the neediest members of the community. Thus, in 2005, the Centre will introduce the component of field work, imposed by the need to intervene in preventing damage to the fundamental rights of citizens. Expansion of the UEM in Mozambique The country's higher education sub-system does not yet meet the needs in terms of training qualified cadres. Furthermore, the number of places offered does not meet the growing needs and the demand that will be felt in the future. This situation demands expansion of the sub-system. To face the need for expansion, in 2005 it is planned to acquire installations for the operations of the Higher School of Marine Sciences and Oceanography in Quelimane. Pedagogic University In 2005 expansion of access and improving the quality of the teachers trained will remain the priority. Thus the University will continue to prioritise the building of infrastructures, curriculum revision and the development of institutional capacity. In this context, and in order to achieve the objectives laid down, the following activities will be undertaken: Expansion and strenatheninq of institutional capacity 0 Establish conditions for setting up new university campuses in Maputo, Beira, Nampula and Quelimane; Equip the institution and install a modern communications system; and  - 4 8 - ECONOMIC AND SOCIAL PLAN FOR 2005 Design qualifications programmesfor the technical and administrative staff. Implement new curricula 0 Hold monitoring seminars as part of the introduction of new study plans. Teachinq, research and extension 0 Hold staff training seminars; 0 Hold the 2nd National Meeting on Educational Research in Mozambique; and 0 Consolidate the Pedagogic University's publishing branch. Post-graduation 0 Continue the 1st Masters' Course in Education; a Prepare the Masters' Course in Mathematics and Portuguese; and 0 Continue post-graduate (masters and doctoral) studies abroad. Higher Institute of International Relations In 2005 the expansion of training areas in international relations and public administration are the main objectives to be pursued within the efforts under way to train and graduate professionals with the quality required to meet demand on the labour market. Thus in 2005 attention will remain concentrated on expanding teaching with the introduction of new courses (Public Administration Course); on improving the quality of education through curriculum reforms, research, and the introduction of new technologies and methodologies of administration in teaching and learning, and in the training of teaching staff. B. SCIENCE AND TECHNOLOGY In this area, the government will implement the Science and Technology Policy, the general objective of which is to develop an integrated system for the production and management of knowledge directed at national needs so as to stimulate the sustainable development of the country. Information and Communication Technologies will continue to play a fundamental role in improving the quality of education, as well as to impress a greater dynamic on administrative activities, guaranteeing efficiency in attending to the concerns of the public. Thus there will be continued promotion of scientific and  - 49 - ECONOMIC AND SOCIAL PLAN FOR 2005 technological innovation to make the country more competitive in the region and in the world. Thus the activities to be pursued in 2005 are as follows: e Dissemination of the Science and Technology Policy and definition of the strategy and mechanisms for implementing it, with identification of priority areas on which to concentrate; e Establishment of a forum with the objective of guaranteeing that coordination of national and international partners promotes integrated development programmes; e Establishment of the institutional basis for implementing the Science and Technology Policy, prioritising the creation of three provincial directorates and upgrading the provincial reflection groups; e Implementation of a national expedition of scientists and researchers to diagnose the main obstacles to development which can be analysed and solved from the technological point of view; e Creation of a National Fund for scientific research; e Establishment of sector scientific councils in four priority areas (water, agriculture, health and energy) and formulation of strategic plans for research in these four areas; e Implementation of a prize-giving system for scientific work; e Creation of the first national scientific journal; e Promotion of initiatives and funding for applied research activities and innovative processes; e Promotion of scientific research and encouragement for programmes of cooperation between technical and professional education, polytechnics and the local business class; e Creation of an incubator for the agricultural area; e Establishment of Multimedia Community Centres at district level; e Creation of the virtual sugar museum; e Formulation of a research strategy for the biotechnology area; e Formulation of an ethical code of conduct for researchers, and a proposal for its implementation; e Launch of the Mozambican Institute of Information and Communication Technologies, with at least one anchor company in Maputo province being the first technology park in the country;  -50 - ECONOMICAND SOCIAL PLAN FOR 2005 Implementation of the ((Equamat)) competition as a way of supporting mathematics teaching and the use of information and communication technologies in secondary schools in at least three provinces; Creation of the Academy of Sciences of Mozambique; Organisation, in collaboration with partners in the area, of the 3'' Mozambican Exhibition of Science and Technology; Drafting proposals for agreements and regulations that seek to coordinate the Sector with the institutions with executive responsibilities in the area of scientific research; Holding olympiads in the area of information and communication technologies; and Developing the institution through drawing up its statutes, staff table, training programme and other activities. C. HEALTH In the area of health, the priority will remain increasing access and improving quality in the provision of primary health care, in the context of reducing excessive mortality and morbidity among the population at large, and in the high risk and poor groups in particular. Provision of Health Care In this area, the main objectives for 2005 are the following: e lnstitutionalise the Quality Guarantee Programme in the framework of consolidating the quality of health care and services; and e Maintain the evolution of the overall volume of activities, and reduce geographical disparities in the consumption of health services. Indicators 2002 2003 2004 2005 %Growth Achieved Achieved Forecast Planned 2005 Care Units ('000) 62,896 67,298 72,000 76,320 6 Care unitsllnhabitant 3.60 3.80 3.80 3.90 EXTERNAL CONSULTATIONS External Consultations ('000) 15,336 17,058 17,265 18,076 5 External consultationsllnhabitant 0.85 0.92 0.91 0.93 Source: MlSAU  -51 - ECONOMIC AND SOCIAL PLAN FOR 2005 Expanded Vaccination Proqramme (PAV) In this area, in 2005 efforts will be undertaken to attain the following objectives: 0 Reduction in mortality and morbidity from diseases that can be prevented through vaccination of children aged 0-23 months, children in the initial grades of school, and women of child-bearing age (15-49 years); Increased availability of equipment and assorted materials for the operation of the Programme with greatest attention to the areas with the greatest shortfaIIs; 0 Strengthening the quality of data on PAV; and Holding the vaccination campaign against measles among children aged 9 months to 14 years old. 2001 2002 2003 2004 2005 Indicators Achieved Achieved Achieved Forecast Planned BCG [O-11 Months] 97 97 109.7 98 98 VAS [9-23 Months] 94 94 96.6 98 98 DPTlHB (3rd Dose) 82 87 91.5 98 95 Anti-Polio (3rd Dose) 82 87 89.6 98 95 VAT-2aPregnant Women 56.9 60 75 VAT-2aWomen 15-49 years 7.1 16.4 25 35 Mother and Child Health and Familv Planning Programme (SMIIPF) In this area, the main objectives for 2005 are the following: Reduction of the hospital maternal mortality rate to 0.16%; Reduction of the rate of hospital deaths among new-born infants; Increased accessibility and availability of essential, basic and complete obstetric services; Reduction of the number of neo-natal deaths from asphyxiation, premature birth, and hypothermia; Improvement in care for newly born infants; Provide more health professionals with the skills to offer quality emergency obstetric care for women in childbirth, particularly for the rural areas; and Establishment of quality standards and criteria for services provided for children.  - 52 - ECONOMIC AND SOCIAL PLAN FOR 2005 2001 2002 2003 2004 2005 Indicators Achieved Achieved Achieved Forecast Planned Ante-natal consultations 100 100 109.5 99.5 100 Institutional births 41.2 43 54.1 47 49 Post-natal consultations 50.5 53.8 57.4 54 58 Family Planning (New Users) 15.26 16.72 17 18 20 1stconsultation children (0-11 Months) 96 97 98 98 98 1st Consultation children (0-4Years) 62 64 66 68 70 In the area of the School and Adolescent Health Programme, in 2005 it is planned: 0 To set up health services adequate to the needs of school and adolescent health; 0 To train health professionals to work with adolescents, in Family Planning, treating abortion complications, and preventing and treating HIV/AIDS; Strengthen technical capacity at central and provincial levels; Improve the system and mechanisms for coordination with other institutions; 0 Approve and publicise the Policy of Adolescent Reproductive Health; and Expand implementation of specific reproductive health services for adolescents and young people. In the area of nutrition, the following will be prioritised in 2005: Educational activities on appropriate dietary habits; Reduction in micro-nutrient deficiency through distributing Vitamin A capsules to all children aged 6-59 months, during growth control consultations; Implement the Nutritional Rehabilitation Programme in its components of training, equipment and making products available; Promotion of production and consumption of foods rich in micro-nutrients; Promotion of the availability and consumption of iodised salt; Promotion of appropriate processing of bitter cassava in Zambezia and Nampula provinces; and Promotion of breast milk, and adequate complementary feeding. Thus, it is hoped that the proportion of children with insufficient weight falls to 6% and that the proportion of children born in hospital with low weight at birth is no more than 10%.  - 53 - ECONOMICAND SOCIAL PLAN FOR 2005 Major endemic diseases In this area, in 2005 priority will be given to the prevention, control and treatment of the main epidemic diseases that have most influence on the morbidity and mortality of the population. Thus, among others, the following activities will be undertaken: HIV/AIDS Under implementation of the Strategic Plan against HIV/AIDS, efforts will be made to guarantee anti-retroviral treatment to 20,800 people and to prevent vertical transmission. 0 Promote the use of insecticide-treated mosquito nets throughout the country; 0 Treatment of cases of fever in the community in accordance with the habits prevailing in the communities; 0 Promotion of integrated treatment of childhood diseases and of ante-natal treatment for women in 20 districts; and 0 Spraying with residual insecticides where recommended. As a result of these actions, it is expected that in 2005 a hospital lethality rate from malaria among children and adults of 2.7% and 5.3%, respectively will be reached. Tuberculosis Introduction of the 6 month tuberculosis treatment regime, with drugs in combined fixed doses; 0 Reduction of patients abandoning treatment to less than 10%; 0 Strengthening the capacity and quality of staff, including laboratory staff, in the areas that most need this, through training and supervision; and 0 Introduction of TPC (preventive treatment with cotrimoxazol) or anti-retroviral treatment for patients with HIV and Tuberculosis, gradually and wherever possible. As a result of these actions, it is expected that the tuberculosis mortality rate will fall to 12% and that the percentage of new tuberculosis cases with positive cured basciloscopy reaches 75%.  - 54 - ECONOMIC AND SOCIAL PLAN FOR 2005 Leprosy Expansion of the geographical coverage of drugs for TMA (therapy with associated medicines) through the involvement of more community volunteers; and Increase in information and education in the most endemic areas (Nampula and Zambezia). Pharmaceutical area In this area, efforts will continue in 2005 to improve the availability of medicines in health units, guaranteeing the consumption of safe, effective and good quality dugs. Thus the main objectives are as follows: Improved management in the supply of medicines to the provincial level and in the health units; and Timely distribution of the medicines requested. Expansion of the Health Network In this area, priority will be given to increasing access to health care through the expansion and rehabilitation of the health network. The following are planned for 2005: Construction Promotion Rehabilitation/Expansion/ Change of function 1 2 10 Health 12 14 Centres Stores 1 Science 2 Institute Laboratories 1 Administrative 4 5 >> Construction of the Matola General Hospital Conversion of the Health Centre at Caia into a Rural Hospital, and of >>> the Health Centre at Gorongosa into a District Hospital Construction of the medical stores in Beira Construction of the lnfulene and Quelimane Health Science Institutes Construction of the National Drug Control Quality Laboratory.  - 55 - ECONOMIC AND SOCIAL PLAN FOR 2005 In the area of developing human resources, in 2005 initial and continual training of workers will be prioritised, in order to improve constantly their professional performance. As for Institutional Development, greater attention will be paid to strengthening the organisation and management of the health care system, including aspects of training in leadership and planning. Under the Strategic Health Plan (PESS), 2005 will see the revision of the plan for the period 2006-2010, and leadership and management courses will be held in the health services, with greatest stress on the rural areas. D. LABOUR In the area of labour, the main objectives in 2005 will be on improving the general business environment so as to attract more private investment to the country, on job creation, and on institutional capacity building, with the purpose of reducing absolute poverty. A further priority will be implementing labour laws and regulations, and extending services of the social security system to the entire country. To achieve the objectives defined, the following are envisaged: Normative Action 0 Conclude the revision of the Labour Law; 0 Draw up, in coordination with the social partners, a draft diploma for the introduction of public and private labour mediation, conciliation and arbitration; and Draw up a draft diploma to expand the personal scope of the Social Security System to cover waged workers of the informal sector, independent workers and the self-employed. Emplovment, labour and professional training 0 Identify job opportunities for 4,000 job seekers; 0 Train professionally 2,000 unemployed, including disabled people, registered at the job centres; 0 Promote apprenticeships for 600 graduates from the technical schools and institutes, in the coordination of formal education with professional training in companies;  - 56 - ECONOMICAND SOCIAL PLAN FOR 2005 0 Upgrade the training sector for management training of micro and small business people; 0 Train 220 women organised in associations, in management of micro and small businesses; 0 Prepare and analyse proposals for productive micro-projects to be financed under FARE, seeking to create job opportunities for their beneficiaries; 0 Accompany and evaluate the Projectfor Social Reinsertion of former miners in Magude, Chokwe and Massinga districts; 0 Support financially and accompany implementation of 200 self-employment projects; 0 Control the recruitment, hiring and legalisation of Mozambican workers abroad; 0 Continue the construction and equipping of the Lichinga, Quelimane, Pemba and Vilanculos professional training centres; 0 Rehabilitate and equip the Chimoio professional training centre; 0 Rehabilitate the premises of the Employment Promotion Office in Maputo, Manhiqa and Chibuto; and 0 Produce regular information bulletins on registered unemployment, strikes, work accidents, social security, migrant labour and professional training. Professional Relations Promote tripartite social dialogue and free collective labour bargaining in companies; and Inspect 5,000 establishments in various areas of activity throughout the country. Social Securitv 0 Draft a proposal to revise funeral benefits and encourage the voluntary maintenance of the registration of unemployed workers; 0 Open district directorates and/or representations in Monapo, Malema, Namapa, Chibuto and Mocimboa da Praia; and 0 Register 1,600 companies and 30,000 workers in the social security system. Strengthening institutional capacitv Build new premises for the Ministry of Labour; 0 Rehabilitate and expand the premises of the Studies Office and the Documentation and Information Centre (CDI);  - 57 - ECONOMIC AND SOCIAL PLAN FOR 2005 Hold professional training seminars for 34 employment staff; Provide additional training to 12 labour administration agents; 0 Recycle 30 labour inspectors and train 20 new labour inspectors; 0 Finish the computerisation of the social security system; and 0 Finish building premises for the Gaza, Tete and Dondo delegations, and start building the Social Security premises in Zambezia and Nampula. E. WOMEN'S AFFAIRS AND SOCIAL ACTION In this area, attention will remain concentrated in 2005 on institutional development and capacity building, on raising the status of women, and on promoting gender equity, security, assistance and social integration for the target vulnerable groups, particularly children, the elderly and the disabled. In this context, the following stand out among the various actions to be undertaken: In the area of institutional development and capacity buildinq Continue drafting the Strategic Plan for the sector; Train, upgrade and improve the skills of staff working in the sector of women's affairs and social action; Improve the methodologies used to gather and analyse statistical data on the programmes and target groups; Design monitoring and evaluation instruments (with indicators disaggregated by sex), to measure the impact of protection and social reinsertion programmes; Continue regulating the operations of public and private social units; and 0 Strengthen coordination and articulation with social actors. In the area of promotinq women's status 0 Approve and publicise the National Gender Policy and Strategy; 0 Continue activities to train, inform and counsel women; Guarantee the integration of a gender perspective in the policies, programmes and projects of the Government and in civil society organisations and the private sector;  - 58 - ECONOMICAND SOCIAL PLAN FOR 2005 0 Implant Provincial Councils for Women's Advancement, a well as gender units in the various government institutions; and 0 Continue promoting awareness and social reinsertion of women victims of violence, and women living with HIV/AIDS. In the area of child Drotection 0 Draw up the National Plan of Action for Children and submit it for approval; 0 Participate in revising legislation concerning children; 0 Continue the integration of orphaned and abandoned children, and those living with HIV/AIDS; 0 Continue developing income generating and professional training projects for street children, and those involved in child prostitution. In the area of the Location and Family Reunification Programme, it is expected that in 2005 the number of children to be documented will grow by 7% in comparison with 2004, due to family abandonment, natural phenomena and social ones such as violence, ill-treatment and the poverty of households, which contribute to the separation of children from their parents. Locationand Family ReunificationProgramme 2003I 2004 I 2005 1 Evolution Oh Indicators Achieved Achieved Planned 2004 2005 I Numberof children documented 1,197 932 1,000 -22.1 7.3 Numberof children reunited I 429 I 300 I 300 1-30.1 II1 0.0 I Source: MMAS In the area of Pre-School Education, in 2005, priority will continue to be given to improving the quality of services provided to children, and to consolidating pre- school education on a mass scale in rural and peri-urban areas. At the same time, activities will be undertaken to make religious communities, NGOs and the private sector aware of the need to provide support to community initiatives concerning the building of more creches and the creation of sustainable methods for running them. In this context, it is expected that in 2005, the number of children, private centres and community creches will increase, compared with 2004.  - 59 - ECONOMIC AND SOCIAL PLAN FOR 2005 Pre-school education 2003 2004 2005 Evolution % Indicators Achieved Forecast Planned 2004 2005 Number of children's centres (state) 15 15 15 0.0 0.0 Number of children attending 1,483 1,097 1,400 -26.0 27.6 Number of children's centre (private) 103 100 100 -2.9 0.0 Number of children attending 7,954 9,365 9,500 17.7 1.4 Number of communitycreches 533 450 500 -15.6 11.1 Number of children attending 37.410 29,000 30,000 22.5 3.4 Number of monitors 870 700 700 -19.5 0.0 Source: MMAS In the areas of the psychological and social rehabilitation and integration of children under difficult circumstances, continued priority will be given to involving community organisations, religious institutions, NGOs and the private sector in caring for orphans and abandoned children in orphanages, accommodation centres and in communities. Thus it is forecast that in 2005 the number of children cared for in state and private orphanages will rise by 40% and 4% respectively, compared with 2004. The number of centres for street children will increase, while other kinds of centres will not. Children underdifficult circumsta :es 2003 Indicators Achieved 2004 2005 Numberof street centres 71 -1.4 14.3 Numberof children cared for 10,659 -18.4 3.4 Numberof orphanages (state) 8 0.0 0.0 Number of children cared for 345 -38.0 40.2 Number of orphanages 14 -7.1 0.0 (Private) Number of children cared for 685 628 650 -8.3 3.5 Source: MMAS In the area of care for the elderly, actions will continue in 2005 to assist them and promote their rights, and to integrate them in families and in the community. It is forecast that the number of elderly people cared for in private centres will decline in comparison with 2004, while the number in state centres will rise. As an integral part of the efforts under way to support the elderly, in 2005 the following activities will be undertaken. Making communities aware of the need to set up Open Community Centres; and  - 60 - ECONOMIC AND SOCIAL PLAN FOR 2005 8 Implementation of National Ageing Policy. 2003 2004 2005 Evolution,YO Indicators Achieved Forecast Planned 2004 2005 Old People'sHomes (State) 10 9 9 -10.0 0.0 Noof old people caredfor 255 215 215 -15.7 0.0 Old People's Homes (Private) 12 11 13 -8.3 18.2 No of old people caredfor 281 462 400 64.4 -13.4 In order to improve care for the disabled and encourage their integration into income generating activities, the following activities are envisaged in 2005: Boost school attendance by disabled children/youths in coordination with other state institutions and NGOs; Continue to place disabled adults who are able to work in micro-credit, income generation and professional training activities; Equip the premises for the Institute for the Visually Disabled in Beira; Continue efforts to promote participation by disabled people in sporting and cuItural activities; Support the development of special education for disabled children from the perspective of inclusive education and physical rehabilitation; and Continue traininghpgrading of sign language interpreters, and divulging sign language. Carefor the Disabled 2003 2004 2005 Indicators .. -..--..- - Achieved Forecast Planned 2004 2005 Disabledpeople identified . . 12,800 5,500 6,000 -57.0 9.1 Disabledpeople accompanied 6,228 600 1,200 -90.4 100.0 Disabledchildren integrated 2,165 3,400 3,000 57.0 -11.8 Numberof transit centres 8 6 6 -25.0 0.0 Disabledpeople caredfor 290 44 100 -84.8 127.3 Special Schools 3 3 3 0.0 0.0 Numberof pupils 308 207 300 -32.7 44.9 Institutefor Visually Disabled 1 1 1 0.0 0.0 Numberof pupils 75 81 170 8.0 109.9 Source: MMAS In the area of support for drug addicts, the chronically ill, and prisoners, the following activities will be undertaken in 2005:  -61 - ECONOMICAND SOCIAL PLAN FOR 2005 0 Continue educational programmes and establish community counselling groups on preventing and fighting against drug consumption; 0 Promote support for the social, community and family reintegration of drug addicts and former prisoners, through education, professional training and income-generating programmes; and Design and implant experimentally a sustainable model of information, counselling, recovery and reinsertion for drug addicts and former prisoners. Programmes of direct social assistance and support for community development Assistance to the least privileged population groups living in absolute poverty, through the Food Subsidy and Income Generation programmes, will remain the priority in the efforts,under way seeking to ameliorate poverty and promote employment for those able to work. Thus for 2005, among other actions, the following are planned: Under the Food Subsidv Programme To assist more than 92,300 beneficiaries of the programme; and 0 To continue divulging the Programme's procedures manual. Under the Social Benefits for Work Programme 0 To enrol 20,000 beneficiaries in the Programme; and 0 To accompany and assess change or the socio-economic situation of the beneficiaries. Under the Income Generation Programme 0 To enrol 31,911 beneficiaries and support the development of savings systems in rural communities; and To train beneficiaries to handle their businesses better, Under the Communitv Development Proqramme Mobilise resources and establish partnerships to implement community development integrated pilot projects (agricultural, livestock, industry, trade and basic social infrastructures) in all provinces. Under the Direct Social Support Proqramme  - 62 - ECONOMIC AND SOCIAL PLAN FOR 2005 0 Provide support to 35,500 disabled people who are proved to be living in poverty. F. VETERANS OF THE NATIONAL LIBERATION STRUGGLE In this area, in 2005, the government will continue to orient its efforts towards valuing history and the better social insertion of the Veterans of the National Liberation Struggle though the following activities: 0 Ensure the social insertion of Veterans of the National Liberation Struggle; 0 Promote the creation and construction of monuments, museums, libraries and historical sites that document and illustrate the history of the National Liberation Struggle; 0 Promote the collection of testimony and research on the history of the National Liberation Struggle; Draw up a project to build a centre for the training and the physical, psychological and social rehabilitation of veterans; Implement the Veterans' Statute. G. CULTURE In the area of culture, in 2005 attention will remain concentrated on preserving and publicising the national cultural heritage, in developing creativity and promoting the cultural industry. Culturat Heritage In the area of identifying, registering and preserving cultural works and values that represent the cultural and natural heritage, the following activities are planned: Conclusion of redefining the mechanisms for applying the Law on Protecting Cultural Heritage; Start drafting proposals for those items of the natural cultural heritage to be submitted for world heritage status; Draw up proposals for revising the legal framework for the cultural heritage area; Draw up a proposal to revise the Law Protecting Cultural Heritage, particularly as regards the classification of the built and urban heritage.  - 63 - ECONOMICAND SOCIAL PLAN FOR 2005 To encourage the use of monuments, museums and other institutions of cultural preservation and publicity, the following activities will be undertaken in coordination with the education and tourism sectors: 0 Definition and standardisation of the terms and concepts used in the area of tangible and intangible cultural heritage; 0 Publicising projects of conserving, preserving and valuing heritage, and techniques of preserving intangible heritage; 0 Begin drafting the proposal for revising museum regulations; 0 Drafting manuals on techniques for the preventive preservation of tangible cultural heritage, and a national programme for conservation and restoration of museum collections; Implement the programme to celebrate national cultural diversity. As for adopting measures conducive to actions envisaged in the Mozambique Island Restoration Programme, in 2005 it is planned to continue rehabilitating infrastructures on the Island, to create the Island Conservation Office and conclude drafting the Island Management Plan. Cultural Action In this area, efforts will be centred on promoting the training and upgrading of the managers and makers of culture. The following activities are envisaged: 0 1st National Seminar on Cultural Associations; 0 National Seminar on Houses of Culture; and 0 Training and upgrading cultural inspectors. In order to publicise the vast artistic and cultural potential, the national institutions and makers of culture, and easy access to information in this area, the following activities are proposed: 0 Development of the Data Bank project on the national artistic and cultural movement and potential; 0 Commemoration of cultural dates (World Poetry Day, World Theatre Day, World Book and Copyright Day, International Dance Day, World Culture Day, Day of SADC Artists and Creators, World Cinema Day). In the framework of improving conditions and expanding the supply of public spaces for cultural activities, areas for artistic and cultural creation will be created or rehabilitated.  - 64 - ECONOMICAND SOCIAL PLAN FOR 2005 As for establishing a legal environment favourable to the development of artistic creativity and to the cultural industry, the following activities are proposed: e Revision of the regulations on concerts (Seminars and debates); a Regulations on filming in Mozambique; a Drafting legislation on the circulation and sale of works of art and handicrafts. In the area of civil education about HIV/AIDS, cultural sessions will be held, and technical staff in the cultural area in the communities will be trained. In the area of training, managers, technical staff, cultural instructors and monitors, and directors of the houses of culture will be trained and upgraded. To strengthen the protection of intellectual property, in the area of copyright it is planned to introduce a system to combat piracy of computer programmes, videos and DVDs. To promote books, a taste for reading, and the book industry, the following activities will be undertaken: a Submit the National Book Policy for approval by the Council of Ministers; and a Prepare the project to introduce the International Book Numbering System in Mozambique. Institutional Development The construction and rehabilitation of cultural infra-structures, particularly the houses of culture, open air stages, provincial public libraries, historic sites (monuments), the buildings of art schools and museums, for cultural promotion and publicity, will continue to merit special attention. H. YOUTH AND SPORTS In the area of youth and sports, priority will continue to be given in 2005 to involving young people in the development of the country, in the fight against HIV/AIDS and in mass physical and sporting activity. Thus programmes will be implemented for the employment and professional training of young people, and to promote socio-cultural interchanges and the practice of mass sport, and high competition sport.  - 65 - ECONOMIC AND SOCIAL PLAN FOR 2005 Youth In order to promote young people's participation in the country's development, in 2005 the priority will remain education, training, employment and housing programmes. In this context, among other activities, the following are planned: Provide technical and methodological assistance to institutionalise the Youth Initiatives Support Fund and make it operational; Provide technical, methodological and financial support to the National Youth Council, and to the establishment of Provincial and District Youth Councils; Guarantee that programmes to fight against STD/HIV/AIDS, and against illicit drug trafficking and consumption, are expanded and made operationaI; Strengthen inter-sector coordination mechanisms, by reactivating the Inter-Sector Adolescents and Young People Support Committee (CIADAJ); Provide technical and financial assistance to the Mozambique Scouts League (LEMO) in holding the !jth African Scouts Festival; Encourage initiatives that generate employment, self-employment and other sources of income for young people under the National Integrated Social Action, Employment and Youth Programme. Mass participation in sports will continue to merit special attention. Thus there will be continued implementation of the school holidays sports programme, and the Mozambique in Movement Programme. Women's sports and sport for disabled people will be promoted. Holding the School Sports Festival will remain a government priority in stimulating mass participation in sport. With the aim of raising the technical and scientific knowledge of cadres and trainers, training and upgrading activities will be held for sports technical cadres, monitors and leaders at national level. Restoration, expansion, improvement and conservation of sports premises and equipment nationally will continue to receive special attention as part of the efforts under way seeking to install modern and properly equipped infrastructures in the country's main urban centres. Encouragement will be given to setting up a national sports equipment industry.  - 66 - ECONOMICAND SOCIAL PLAN FOR 2005 1. ENVIRONMENT In the area of the environment, in 2005 activities will be pursued seeking to guarantee environmental preservation and an appropriate use of natural resources, prioritising environmental inspection, inter-sector coordination, and the involvement of communities in planning and using natural resources. In this context, in 2005 the following actions will be prioritised: Inter-sector Coordination 0 Approve and implement the Environmental Strategy for the Sustainable Development of Mozambique; Set up inter-sector committees to control soil erosion, and prevent bush fires and deforestation. Environmental Manaqement In the area of conserving natural resources, it is planned to: Draft the proposal for the National Strategy on community management of Natural Resources; Implement international conventions (on drought and desertification, climate change, biodiversity, and Ramsar on wetlands); Revise the National Plan of Action to combat drought. In the area of coastal management, it is planned to formulate and implement coastal management policies/programmes in Mozambique, draw up a strategy on wetlands, and promote demonstrative actions on their management. In the Urban Environment, priority will be given to developing strategies to combat environmental problems in the urban centres, particularly those associated with the management of urban solid waste, with the exploitation of green areas, and with urban pollution. Environmental Impact Assessment With the purpose of ensuring that economic and social undertakings operate in a perspective of economic, environmental and social sustainability, activities will be concentrated on the following: Environmental Impact Assessment (EIA) of development projects; 0 Strategic Environmental Assessment (SEA); Prevention and control of environmental pollution;  - 67 - ECONOMIC AND SOCIAL PLAN FOR 2005 0 Environmental audits of activities under implementation; 0 Implementation of the system of licensing and environmental auditing; 0 Setting up a system to manage dangerous wastes, and making it operational; Implement international conventions (Stockholm, Basle, Bamako, Vienna and the Montreal Protocol). Territorial Planninq and Classification In this area, priority will go to the following: 0 Following the drafting of plans on territorial classification, and implementing the information system at provincial level; 0 Holding upgrading courses on territorial planning and classification, and organising seminars to divulge the legislation in force on the planning area; 0 Train local bodies in the use of the new methodological guide for drafting territorial plans; 0 Drafting norms and regulations for the Territorial Classification Policy; 0 Draw up the programme of urban reclassification in some neighbourhoods of Maputo City and Pemba; 0 Draw up structural plans for the towns of Mocuba, Metangula, Chokwe and Chimoio; 0 Draw up partial plans for Mozambique Island and Nicoadala town; 0 Draw up urbanisation plans for the settlements of Namialo, Inchope, Vila Franca do Save, Muxljngoe and Pambara; 0 Draw up land use plans with priority for the Zambezi Valley; 0 Draw up 9 district plans in the area of planning and finance in Zambezia, Sofala, Tete and Manica provinces. Environmental Promotion Information and education on the environment will continue to be prioritised, in order to guarantee sustainability in the exploitation of natural resources. Thus, in 2005, it is planned to: Divulge policies and strategies relevant to the environmental sector; Promote the development of educational activities and environmental awareness; Promote campaigns of awareness about uncontrolled bush fires;  - 68 - ECONOMIC AND SOCIAL PLAN FOR 2005 0 Make radio and television programmes, and publish educational magazines and brochures on environmental questions. Environmental General Inspectorate With the purpose of ensuring that every citizen lives in a healthy environment and enjoys social and economic well-being, environmental inspection activities will be undertaken of development projects, as well as administrative inspection at the level of the ministry. Environmental Leqislation In the area of Environmental Legislation, the following activities will be undertaken: 0 Draw up the Environmental Inspection Regulations; 0 Draw up the Regulations of the Law on Territorial Planning and Classification; Draw up the Regulations on Waste Management; 0 Draw up the Regulations on Preventing Marine and Coastal Pollution; Draft norms for the implementation of the Environmental Impact Assessment Regulations. Institutional Capacitv Buildinq In this area, in 2005 it is planned to: Set up the Environmental Statistics Office; Strengthen the planning system, so as to guarantee implementation of the Strategic Plan; Draw up and adopt indicators on sustainable development and on the performance of the Ministry; 0 Develop institutional capacity building activities at all levels; 0 Ensure integration of environmental matters into PARPA.  - 69 - ECONOMICAND SOCIAL PLAN FOR 2005 V.2 ECONOMIC AREA A. AGRICULTURE In this sector, the actions to be undertaken in 2005 will prioritise activities in the sustainable use of natural resources with community participation, livestock assistance, encouragement of fruit trees, of cash crops such as cotton, paprika and tobacco, community reforestation, making appropriate technologies available to low cost within the reach of small producers through liaison between research and Rural Extension, simplification of the procedure for obtaining Land Use Title (DUAT), particularly for small producers, and actions seeking to conserve agricultural products in order to reduce post-harvest losses. Thus, the policy measures are as follows: a Undertake inspections of local production of seeds and formal production in Inhambane and Maputo; a Undertake multiplication of seeds and vegetative material in Maputo, Gaza, Sofala, Manica, Zambezia and Tete, and ensure that 16% of grain production is marketed; a Distribute low cost processing machines in the zones producing root crops, grains and coconuts (5 for Maputo, 10 for Inhambane and Nampula and 5 for Zambezia); a Transmit technological messages in all provinces; a Produce and distribute cashew seedlings benefitting 38,000 household so as to promote new plantings of cashew trees; a Continue implementing the CDRs and on-farm tests in Nampula, Niassa and Tete, and undertake the integrated management of cashew pests and illnesses in Nampula, Gaza, Zambezia, Maputo and Cab0 Delgado provinces; e Produce and distribute saplings of various fruit species in Cab0 Delgado, Inhambane, Maputo and Nampula provinces; a Promote the creation of community management nuclei at local level and support the producers in the construction of improved corrals; a Facilitate access to mechanised cassava processing in Inhambane, Nampula and Cab0 Delgado; a Encourage the use of animal traction in Tete, Gaza and Inhambane provinces, hold livestock vaccination campaigns in all provinces, brand and register livestock in Gaza, Maputo and Tete, and keep a watch for cases of foot and mouth disease and African swine fever in Maputo province;  - 70 - ECONOMIC AND SOCIAL PLAN FOR 2005 Participate in activities of the household poultry development programme in Manica province; Demarcate the Chirindzene reserve and undertake forestry and wild life surveys and their respective zoning in the Matibane and Mecuburi reserves; Draw up an Inventory of areas for forestry concessions; Monitor elephant migratory corridors in order to mitigate madanimal conflicts; Undertake radio campaigns in local languages against uncontrolled bush fires; Make forestry concessions operational, and implement the management plans; At least 10% of community companies established and operational, training of extensionists and communities in market analysis and development, and grant the community companies 20% extra seed money; Publicise the land legislation and procedures, gather and prepare information to update the provincial land registers, issue land titles throughout the country, and recognise new requests for land; Undertake consultations with local communities for the land award process; Identify and select the places to benefit from the installation of new irrigation schemes and/or rehabilitate the existing ones in Gaza, Niassa and Nampula provinces, and partially rehabilitate the Chipembe irrigation scheme; Make staff and producers aware of the danger of HIV/AIDS; Strengthen the organisational, technical and financial capacity of grass roots organisations. B. INFRASTRUCTURES Roads Much of the activity in the area of roads will be concentrated on continuing the work defined in the Third Roads Programme, with the objective of reducing the proportion of the national road network that is impassable. This programme began in 2002 and is scheduled to end in June 2005.  - 71 - ECONOMIC AND SOCIAL PLAN FOR 2005 The main actions plannedfor the roads area are as follows: In institutional capacitv buildinq, there will be continued efforts to strengthen the response capacity of ANE staff at central and provincial level through technical assistance to the ANE and contracting local consultants to inspect routine maintenance work on the roads. In the development of human resources, there will be continued training and upgrading of workers in the roads area. In the road rehabilitation and maintenance programme, there will be continued work on rehabilitating the main roads, secondary and tertiary roads, rehabilitating and assembling metallic bridges, periodic maintenance of roads and routine maintenance, as the following table summarises, which will make a 62% contribution to the evolution of the conditions of the roads. Achieved Forecast Planned T.C.Vol. 2003 2004 2005 2005(%) Rehabilitationof Main Roads 63.7 330.0 221.0 -49.3 Rehabilitation of SecondaryRoads 171.4 188.0 336.0 78.7 Rehabilitation of Tertiary Roads 592.3 521.0 534.0 2.5 Periodic Maintenance 396.4 918.0 1635.0 78.1 Routine Maintenance 10591.6 13834.0 14343.0 3.7 Rehabilitation and Assembly of Metallic Bridges 7 1 5 1 In the rehabilitation of main roads, the programme will involve the following stretches: Stretch to Rehabilitate Length in Kms EN1 Mawto - Marracuene 18.0 EN1 ManhiGa lncoluane 30.0 EN1 Maxixe Crossroad ENl/ER520 -- 62.0 EN1 Crossroad EN1/ER 520 -Crossroad EN1/212 40.0 EN102 Vanduzi Changara - 16.0 EN7/104/232Namacurra- R. Ligonha 221.o 55.0 TOTAL The rehabilitation of secondary roads will follow the programme below:  - 72 - ECONOMICAND SOCIAL PLAN FOR 2005 Stretch to Rehabilitate Length in Kms EN221 Bene - Fingoe 36.0 EN206 Chissano Chibuto - 22.0 EN223 Crossroad EN103/223 Calomue 71.O EN239 Nametil -Crossroad EN239/260 49.0 EN242 Litunde Front.C.Delgado - 145.0 EN256/205 Chokwe - Nova Lagoa 13.0 TOTAL 336.0 Under the road maintenance component, periodic maintenance work is envisaged on about 1,635 Kms and routine maintenance on 14,343 Kms which will be undertaken throughout the country as the table below indicates: Rehabilitation of Main Roads 301 I 3190 Rehabilitation of Secondary Roads Rehabilitation of Tertiary Roads 152 5260 1182 5893 TOTAL 1635 14343 In the area of rehabilitatinq bridges, there stand out the start of building the bridge over the Zambezi river at Caia, the start of work on building the bridge over the Limpopo river between Guija and Chokwe, continued rehabilitation work on the Mozambique Island bridge, the start on building the Unity Bridge between Mozambique and Tanzania, the start on building the Moamba (Maputo province) bridge, the start on building the bridge over the Lugela river (Zambezia), rehabilitation of the bridge over the Meluli river (Nampula) and the assembly of 5 metallic bridges. Much of the routine maintenance work will be done by labour intensive brigades employed by the ECMEP's and by other private national contractors, since technology is regarded as of great importance for the roads sector. Water and Sanitation In the area of water, activities will be aimed at improving the level of coverage, and the level of service provision, accompanied by institutional measures aimed at the sustainability of water supply to the rural, urban and peri-urban population. In the area of water resource management, the following activities are planned: implementation of short term actions arising from the National Water Resource Management Strategy; viability studies for ARA-Centre-North and ARA-North; preparation of the construction projects for 10 small dams in Manica, Gaza,  - 73 - ECONOMICAND SOCIAL PLAN FOR 2005 Inhambane, Sofala and Tete provinces; holding viability studies on rehabilitating the Chipembe dam, and building the Mapai dam on the Limpopo river. In the context of the weather station network, it is planned to rehabilitate 50 stations throughout the country, 30 of them measuring rainfall and 20 measuring river levels. Finally, installing a telemetric network in the Limpopo basin is planned. As for water sharing agreements, stress should be laid on the following: INCOMAPUTO - Interim tripartite agreement between Mozambique, South Africa and Swaziland for cooperation in the protection and sustainable use of the water resources of the lncomati and Maputo river basins. Under this agreement, through the Tripartite Technical Committee (TPTC) between South Africa, Mozambique and Swaziland, it is intended to promote implementation of the INCOMAPUTO Joint Plan of Action, and ensure implementation at internal level through coordination and regular follow-up of activities with the relevant national institutions. LIMPCOM - Agreement between Mozambique, South Africa, Botswana and Zimbabwe on establishing the Limpopo River Basin Commission, under which it is intended to promote implementation of the agreement at national and international level, through preparing draft plans and activities for LIMPCOM to take effect, and developing mechanisms for complying with the obligations arising from signing the agreement creating LIMPCOM in coordination with the institutions involved in the management and use of the water resources of the Limpopo Basin. ZAMCOM - Agreement between Mozambique, Angola, Botswana, Malawi, Namibia, Tanzania, Zambia and Zimbabwe on establishing the Zambezi River Basin Commission, under which it is intended to promote implementation of the agreement at national and international level through drawing up draft plans and activities for ZAMCOM to take effect. Under the Rural Water Supply Programme, continued activities are planned to rehabilitate and to build scattered sources to increase coverage, and to build, rehabilitate and extend Small Water Supply Systems that will serve towns and district capitals. Thus, studies will begin to draw up Executive Projects for the rehabilitation and expansion of systems in Niassa, Nampula and Tete provinces, studies will be concluded for systems in Cab0 Delgado and Nampula provinces, and, as regards implementation of the work, emphasis should be laid on the start of work on systems in Cab0 Delgado, Tete, Manica, Inhambane and Maputo provinces. The target for rural water coverage for 2005 is 46.5%. The construction and rehabilitation of 2,310 sources is planned, thus raising the percentage of the population with access to rural water to 46%.  - 74 - ECONOMIC AND SOCIAL PLAN FOR 2005 Rehabilitation and Cons1 uction of Water Sources Province Constructio Rehabilitation Total Mechanical Wells Boreholes Sources boreholes and Wells I C. Delgado 50 23 110 I 183 Niassa 55 50 120 225 Nampula 180 90 380 625 Zambezia 170 80 190 440 Tete 42 25 85 152 Manica 30 5 50 85 Sofala 30 35 25 65 lnhambane 115 40 140 330 Gaza 25 10 55 90 Maputo 25 10 80 I 115 Total 722 368 1235 1 2310 The target for urban water supply is to guarantee that 40% of the urban population has access to clean drinking water. 28,000 new connections are planned. Under the 5 cities projects, the following are projected: Maputo City - continue work on building the Hulene Distribution Centre, and its distribution network, and the expansion of the system to neighbourhoods in the northeastern part of Maputo; Beira - continue work on building the new impoundment station on the Pungue River, to guarantee improved quality and greater quantity of water; Quelimane - start of work on building the new water supply system, and building the new reserve system in Nicoadala and Quelimane; Nampula - rehabilitation work on the old treatment station in order to double the existing treatment capacity, and expand the network, covering new areas and improving services. In the sanitation area, special attention will be paid to actions that seek to reduce mortality from water borne diseases, and to promote hygiene and public health through introducing an approach integrating water and sanitation. In order to improve the urban sanitation system, it is planned to start rehabilitating the Maputo, Matola and Beira systems. As for water supply and sanitation, particular attention will be paid to continuing the 4 cities project (Inhambane, Maxixe, Xai-Xai and Chokwe) in its 2nd phase, construction of latrines in low-lying areas and monitoring the results, building of solid waste decomposition units, and improving the sanitation systems in the 4 cities. The urban sanitation target is to guarantee that 37% of the urban and peri-urban population has access to sanitation services. The building of 25,000 improved latrines is planned. As for rural sanitation, the construction and improvement of 13,000 latrines is envisaged, thus raising the percentage of the rural population with access to sanitation services to 37.6%.  - 75 - ECONOMIC AND SOCIAL PLAN FOR 2005 Institutional Development Some reforms will be introduced in the implementation of the National Water Policy in order to improve the sector's performance. In this area, the following should be mentioned: a Continuation of the process to set up the nuclei of the Centre-North and North ARAs, and consolidation of the Centre and Zambezi ARAs; a Continued implementation of the demand principle in water supply to rural areas; a Improve the performance of monitoring systems, particularly with regard to gathering water supply and sanitation coverage data. To improve the monitoring system, it will be necessary to strengthen institutional monitoring capacity, mainly at provincial level; a Implement the Water Sector Human Resource Management and Development Strategy; a Continue drawing up the Water Resource Integrated Management Strategy, and proceed to revise the Water Law; 0 Continue decentralised planning and implement the Water Sector Human Resource Management Strategy in order to strengthen capacity, particularly at provincial level; a Approve and test the models of the National System for the Management of Small Systems in 3 systems by the end of 2006; a Consultative process for the strategy and action plan for promoting small and medium rural water and sanitation companies, including the future of EPARs and the implementation of pilot activities that will be carried out in at least 3 provinces in 2005 and in the rest by the end of 2008; a Approval of the total allocation from the decentralised sector budget for wells and boreholes; a With regards to the introduction of SWAP within the water sector programme' the start of long term planning and an ever greater adherence by partners are envisaged; a Start implementing the regulations on Licences and Concessions, and the draft statutes for the creation of CEDESA (Centre of Studies for Water Sector Strategic Developments). In order to guarantee increased access to energy for domestic use and for economic activities, actions will be undertaken to expand the national electricity grid, and the network for the distribution and sale of liquid fuels, as well as actions seeking to implement identified energy projects and reforms in the sector. Thus the actions to be undertaken are:  - 76 - ECONOMIC AND SOCIAL PLAN FOR 2005 Continue expanding the national electricity grid to connect the following places: (Nampula) - Moma, Netia, Nacaroa, Chalaua, Murrupula and Muecate; (Cabo Delgado) - Montepuez, Chiure, Namapa, Ancuabe and Metoro; (Niassa) - Lichinga and Metangula; (Zambezia) - Namacurra, Maquivale, Zalala, Macuse, Maganja da Costa and Inhassunge; (Tete) - Chitima, Chicoa, Magoe, Mukumbura, Chipanga, MurraGa and Changara; (Manica) - Catandica, Guro, Inhazoia, Cruz and Macossa; (Sofala) - Micane, Caia, Inhamitanda, Inhaminga, Marromeu, Nhansacara and Missana; (Inhambane) - Zandamela, Chissibuca, Mavila, Cambine, Morrumbene, Massinga and Murrungulo; (Gaza) - Limpopo Valley and Massingir; Electrification based on solar powered systems of the following localities: (Tete) - Boroma, Doa and Domue; (Manica) - Mungari and Mavonde; (Sofala) - Muxungue and Estaquinha, (Inhambane) - Vila Franca do Save; Continue implementing the project to build the Switching Centre, which will allow centralised management of the National Transmission Network, and better coordination with the regional energy transmission system within the SouthernAfrica Power Pool; Continue actions seeking to implement energy projects under the Memorandum of Understanding between Mozambique and South Africa about the NMPD (NorthMozambique Power Development Initiative); Conclude the viability study on the Massingir hydro-electric project; Continue reforms in the energy sector, including the promotion of private participation in a concession regime; Develop incentive mechanisms to expand the distribution and sales network for liquid fuels, particularly to rural areas, and for kerosene and LPG, as well as ensuring the supply of unleaded petrol nationally; C. FISHERIES In this sector, the activities to be undertaken will be aimed at improving domestic supplies of fisheries produce, through increasing the amount landed, and reducing post-catch losses, growth in exports through increasing the amount produced by fish farming and adding value to artisanal production, and improving the living conditions of fishing communities. Thus, the actions to be undertaken are: In the area of artisanal fishing:  - 77 - ECONOMICAND SOCIAL PLAN FOR 2005 Development of conditions for adding value to artisanal fishing production through the extension of improved processing techniques and conservation mechanisms as well as promoting measures to collect and market production with the involvement of private operators; 0 Increasing the economic yield of the fishermen through the extension and modernisation of fishing techniques for operations on the open sea, and diversification of production; 0 Study mechanism for mass collection and use of the by-catch from industrial prawn trawling, with the involvement of artisanal operators; 0 Continue action to improve the living conditions of the fishing communities through support for building schools, health centres and water sources, and for the rehabilitation of tertiary access routes in Zambezia, Sofala and Nampula provinces, under the Integrated Sofala Bank Artisanal Fisheries Project; Conclude treatment of the data from the national artisanal fisheries census, and harmonise the results within the National Statistical System in coordination with the INE; Continue micro-credit activities in the areas covered and expand them to new areas where fishing can be encouraged; Hold training seminars and sessions for associations of fishermen with priority for areas where integrated projects are implanted, and in promoting the training of community councils and co-management district forums in Cab0 Delgado, Nampula, Sofala and Zambezia provinces. In the area of semi-industrial and industrial fisheries: 0 Undertake research and experimental activities in new fishing areas; 0 Improve capacity to inspect fisheries activity and to control fishing efforts in order to ensure sustainable fisheries; Hold bio-economic studies of the prawn fishery; Introduce fishing equipment that is compatible with protecting turtles while trawling, and adopting combined measures to reduce the by-catch (fish) caught during prawn trawling, and to maximise the economic use made of the by-catch that is caught; In the area of Fish Farming and Fisheries Research: 0 Continue to promote the development of sustainable farming of prawns and seaweed, in order to increase exports;  - 78 - ECONOMIC AND SOCIAL PLAN FOR 2005 0 Continue support for initiatives to develop fish farming in inland areas to guarantee increased production of fish for consumption and of a surplus for export; 0 Continue promoting conditions whereby fish farming produce can enjoy access to export markets, through inspecting hygienic and sanitary conditions on the fish farms, and audits of the quality control systems; 0 Expand the micro-credit system to promote artisanal fish farming: 0 Monitor and evaluate the state of exports of the resources of surface water and deep water prawns, and fish (including Kapenta from Cahora Bassa) in order to support management measures; 0 Consolidate application of the sampling system in the artisanal fisheries statistics, with a view to expanding the sample, and designing a method of extrapolating from the results; 0 Assess the potentialfor developing marine and fresh water fish farming. With regard to public administration, infrastructures and fisheries equipment: Continue revising and drafting the general and specific regulations of the Fisheries Law, particularly the Regulationsfor InlandWaters Fisheries: 0 Continue the financial clean-up and restructuring of the state business sector, namely Emopesca and the fishing ports; 0 Continue implementing the Monitoring, Control and Inspection System (MCV), with stress on inspection via satellite (VMS); 0 Draft the sector's Statistical Master Plan, and finish developing the Methodology for Planning and Monitoring activities of the fisheries sector in the framework of the National Statistical System: 0 Start the project to rehabilitate Beira Fishing Port, and build installations for the Cab0 Delgado Provincial Fisheries Services; 0 Rehabilitate the premises of the Fisheries School, and of the Small Scale Fisheries Development Institute; 0 Design the project to build new premises for the Ministry of Fisheries and study the project to rehabilitate the Angoche Fishing Port. D. MINERAL RESOURCES In this sector, in 2005 activities will be centred on increasing production and exports, through stimulating mining, and making electricity available. Among the main activities to be undertaken the following stand out:  - 79 - ECONOMICAND SOCIAL PLAN FOR 2005 In the mining sector: Continue activities seeking to develop the heavy sands projects at Moma, Chibuto and Moebase, as well as promoting the licensing of new areas for prospection and mining research; Establish mechanisms for incentives for increased production, processing and primary transformation of mineral products such as tantalum, graphite, diatomite, granite, titanium, industrial beryl, among others; Implement a fiscal regime more attractive to investment; Promote small scale and artisanal mining, as well as the exploitation of deposits of apatites and phosphates with a view to setting up a fertiliser industry in the country; Promote the extraction and processing in an organised way of precious and semi-precious stones, in order to formalise this sector throughout the country, through associations; Continue consolidating the pilot centres for small scale mining in Zambezia, Tete and Nampula; Guarantee implementation on the ground of the Moatize Coal Project, and the signing of agreements under the technical and economic viability study to be presented by the company granted the concession; Promote the licensing of coal research in other coal basins. In the geological sector, attentions will be directed to: Continuing the geological inventory and mapping under the Capacity Building and Reform Project in the Mining Geology Sector; Promote and follow the prospection for heavy minerals in potential sands along the coastal strip from Quelimane to Quinga in Zambezia and Nampula provinces, respectively; Draw up the new geological map of Mozambique on the scale of 1:I.OOO.OOO and guarantee continued prospection and research in selected areas on the scale of 1:50.000; Start the environmental geological mapping of the Mozambican coastal zone on the scale of 1:50.000 and draw up the Engineering Geology Map of Maputo on the scale of 1:50.000; Promote the inventory of non-metallic minerals in Maputo, Gaza and lnhambane and the inventory of the country's mineral and thermal waters; Conclude the geological mapping of the entire national territory on the scale of 1:250.000, and continue establishing the National Geological Museum;  - 80 - ECONOMIC AND SOCIAL PLAN FOR 2005 8 Guarantee the expansion, upgrading and maintenance of the seismographic stations throughout the country. As for the hydrocarbon sector, measures for 2005 are: Guarantee continued and systematic prospection for hydrocarbons in the Moqambique and Rovuma basins; Guarantee prospection activities in the Rovuma basin, in the Zambezi offshore blocks, in blocks 16 and 19, and in other onshore and offshore blocks; Ensure additional prospection in the Pande and Temane blocks, including opening research and production wells so as to increase the reserves and maximise use of the gas resources of these blocks; Ensure conclusion of the study on options for processing inside the country and of transporting condensed gas from Pande and Temane, including the possibility of building a quay specifically for transport and sale on the domestic and foreign markets; Guarantee conclusion of the studies assessing the lnhassoro deposit, which may make its commercial exploitation possible; Guarantee conclusion of the studies for the use and distribution of natural gas at the five offtake points along the gas pipeline between Temane and Ressano Garcia to implement projects aimed at the industrial and domestic sectors; Ensure expansion of the Data Centre, so as to make it a national and international reference point providing assistance to companies interested in investing in the petroleum sector; Consolidate the legal framework for the sector, and set up the National Petroleum Institute; Monitor the production of natural gas at Temane, and its export to South Africa; Promote the licensing of new areas for hydrocarbon prospection; Ensure the conclusion of the pipeline from Ressano Garcia to Matola, for the supply of natural gas. As for the inspection sub-sector, the measures for 2005 are: 0 Continue monitoring and inspection of geological, mining and hydrocarbon activities in order to ensure compliance with the legislation in force; 8 Ensure legality, regularity and good management of acts and procedures in the budgetary and patrimonial areas of the sector;  -81 - ECONOMIC AND SOCIAL PLAN FOR 2005 Control the legality of the procedures and operation of the administrative services of the sector. E. INDUSTRY AND TRADE In this sector, the specific objectives for 2005 are to regulate competition, integrate the informal sector into the formal system, ensure permanent access to international sources of information on prices, market trends and national statistics, and improve the quality and competitiveness of Mozambican products and services. The main actions planned for 2005 are: e Reformulate industrial policy and strategy; e Draw up and implement strategies for the textile and clothing, and metal- working sectors; e Draw up and implement the Strategy for Small and Medium Companies (PME's); e Implement the Strategy for developing Exports of Wood Produce processed in Mozambique; e Draft the Competition Policy; e Draw up and implement the Agricultural Marketing Strategy (ECA) for the period 200512009; e Participate in joint missions: Government, FA0 and WFP; e Simplify and computerise commercial and industrial licensing; e Publicise the Regulation on Commercial Licensing; e Restructure the ICM; e Ensure the country's participation and representation in bilateral, regional and multilateral trade systems; e Step up bilateral trade relations, particularly with neighbouring countries; e Guarantee inspection of industrial and commercial activities; e Implement and monitor the Quality Policy and Strategy, and also support economic associations and the productive sectors in quality matters so as to make them more competitive; e Guarantee the restructuring of the Small Scale Industry Fund (FFPI); e Expand implementation of single counters for attending to the public.  - 82 - ECONOMICAND SOCIAL PLAN FOR 2005 F. TOURISM In this sector, activities will be centred on continuing and complementing actions that have already begun. Taking into account the existing opportunities from the perspective of growing evolution of the sector, of tourist activity and of the promotion of the sustainable development of tourism and of its fundamental role in poverty reduction through job creation, and its contribution towards attenuating imbalances in regional development, the following are planned for 2005: In the institutional field 0 Disseminate the Tourism Policy and the Strategic Plan nationally, from the perspective of mobilising funding for the activities included in the Strategic Plan for the Development of Tourism in Mozambique; 0 Set up a National Tourism Forum with the purpose of establishing a platform for consultation between those involved in the development of tourism; 0 Continue assessing the institutional structure of the Ministry of Tourism, and make it adequate for responding to the needs of the industry; Human resources Continue activities to stimulate mid-level training in the area of the hotel industry, tourism and conservation; 0 Approve the Human Resource Strategy for the tourism sector; Develop a mechanism for the career placement of wardens allocated to the conservation areas; Encourage private sector participation in providing training, education and professional skills in the tourism sector; Revive the training centre at the Gorongosa National Park, and the basic training school for game wardens at the Maputo Special Reserve; 0 Develop training and upgrading programmes for tourism inspectors; Reorient the Andalucia Hotel-School. Inter-sector Coordination, Inspection of Tourism and of Private Investment: Regulate the Tourism Law; Revise the classification of hotel establishments; Implant the Chimanimani Reserve management structure, and re-occupy the Pomene and Gile reserves;  - 83 - ECONOMIC AND SOCIAL PLAN FOR 2005 0 Encourage the creation of inter-sector coordination platforms at various levels; 0 Continue with inspections in tourist zones, and supervision in he conservation areas; 0 Promote growing participation by Mozambican investors in tourism through strengthening the FUTUR programme, and Develop a strategy to support small and medium companies in the tourism sector, and mobilise investment for the Conservation Areas. Conservation areas 0 Consolidate the development of the Libombo, Limpopo and Chimanimani cross-border conservation areas, by mobilising public and private investment; 0 Adopt measures for the economic use, and develop systems to monitor and evaluate the development of the conservation areas, namely the Quirimbas Park, Gorongosa, Limpopo and Chimanimani; 0 Design guiding standards for the establishment of administrative and recreational infrastructures, reorganise the management structure, and develop a corps of wardens in the conservation areas; 0 Continue actions to rescale the hunting areas; 0 Start establishing new cross-border conservation areas, namely: ZIMOZA and Niassa/Cabo Delgado. Tourist promotion Develop mechanisms to make use of the services provided by Mozambique's representations abroad to promote tourism; 0 Approve the Marketing Strategy; Continue setting up information counters for travellers at the main crossing points; 0 Continue actions to encourage domestic tourism; Explore the possibilities for strategic alliances with neighbouring countries, to participate in international tourism fairs; 0 InstalVdevelopa Portal for "Tourism in Mozambique"; 0 Develop a public relations programme and promote awareness programmes for the various sectors that deal with tourists;  - a4 - ECONOMIC AND SOCIAL PLAN FOR 2005 0 Hold in Mozambique the Congress of Travel Agencies, which involves thousands of economic agents and media professionals, and which serves as a vehicle for increasing the number of tourists and revenue in coming years, as well as placing the country on the international tourist market; 0 Work in partnership with other sectors to consolidate the programme of cultural and events tourism. G. TRANSPORT AND COMMUNICATIONS In this sector, the actions planned for 2005 will continue to be marked by a gradual improvement in the reliability, safety, comfort and expansion of transport services provided to the public in urban and rural areas, in more efficient participation by the national business class in control, operation and investment in the sub-sectors, and the rapid development of the sector through updating legislation, adapting it to the changeddemands that are taking place, making it more inclusive and dynamic. Thus in 2005 the following will be undertaken: In the area of Communications Telecommunications Policy drafted and approved by the Council of Ministers; Draft the Policy on Universal Access; Draw up the Strategy for Developing Universal Access; Draw up the Postal Sector Policy; Draw up the Postal Service Law; Develop the Strategy for Restructuring the Postal Sector; and Privatise TDM. In the area of Civil Aviation Develop Nacala International Airport; Continue actions to improve conditions of air safety and navigation. In the area of Maritime, River and Lake Transport 0 Hydrographic surveys in the ports of Maputo, Beira, Inhambane, Quelimane, Bazaruto and Mocimboa da Praia/Chinde; 0 Hydrographic surveys in Niassa (ICEIDA Project); 0 Production of sailing directions for southern Mozambique and Lake Niassa;  - a5 - ECONOMICAND SOCIAL PLAN FOR 2005 0 Build the lighthouse at the approach to the port of Chinde; 0 Rehabilitate the Mafamede lighthouse, in Angoche; 0 Maintain the network of navigation aids; 0 Study the general circulation in the bays of Maputo and Sofala; 0 Study the distribution of pollutants within Maputo bay; Rehabilitate docking infrastructure particularly for the MaputOKatembe and Inhambane/Maxixe ferries; 0 Acquire vessels for the crossings. In the area of Road TransDort 0 Revise the Automobile Transport Regulations (RTA); 0 Set up road terminals along the main transport corridors, with priority for the cities of Maputo, Beira, Nampula and Tete; 0 Reorganise the road traffic inspection system, in order to combat illegal exercise of this activity; 0 Encourage expansion of the freight transport network into rural areas, in order to support peasants in marketing agricultural surpluses; 0 Redefine the policy of technical assistance for automobiles; 0 Consolidate the operations of the road transport management sub- committees to monitor and implement bilateral and multilateral agreements; 0 Review the bilateral road transport agreements. In the area of Road Safetv 0 Continue actions to improve road safety conditions; 0 Make compulsory insurance operational; 0 Introduce road inspection and supervision; 0 Set up a system of information and harmonisation of norms and procedures in the context of SADC. In the area of Ports and Railways 0 Continue actions aimed at leasing out the Nacala port and railway, and 0 Continue actions aimed at leasing out the port of Quelimane, as well as mobilising funds for dredging the port of Beira.  - 86 - ECONOMIC AND SOCIAL PLAN FOR 2005 In the area of Meteorology 0 Continue actions to improvethe quality of weather forecasts, through the introduction of numerical models; and 0 Continue actions to improvethe system for communicating meteorological information to the public through the publication of weather forecasts on television, the Internet, audiotext and newspapers in a format easier to understand. V.3. GOOD GOVERNANCE, LEGALITY AND JUSTICE, DECENTRALISATlONAND DECONCENTRATlON Good governance is one of the fundamental conditions for a successful strategy of fighting poverty. PARPA includes policies to promote good governance, such as: decentralisation and deconcentration, reform of the public administration so that it responds better to the needs of citizens, the strengthening of the capacity and efficiency of the legal and judicial system, improvements in public security, and the development of a programme focused on reducing corruption at all levels. A. REFORM OF THE PUBLIC SECTOR, DECENTRALISATION AND DECONCENTRATION The reform of the public sector covers components of decentralisation and rationalisation of structures and procedures of service provision, improved formulation and monitoring of public policies, professionalisation of the staff in the Public Sector, improved financial management and accountability, and the fight against corruption. In decentralisation and deconcentration, PARPA establishes as the main objective endowing the Local State Bodies at district and provincial level with greater dynamism and capacity. Thus, among other actions to be developed to this end, the following deserve mention: 0 Monitor implementation of Law no 8/2003 on Local State Bodies and its Regulations, in training and upgrading civil servants, taking the following aspects into account: institutional reform, rationalisation of human resource management, rationalisation of administrative procedures and assistance to the Local State and Local Authority Bodies; 0 Clarify information on the budgetary transfers in the Budget Execution Report for the municipalities (FCA and FIIL);  - a7 - ECONOMIC AND SOCIAL PLAN FOR 2005 Monitor district performance in participatory planning, based on the Participation Guide; Investigate options for increasing allocations of Local Development funds to the districts through clear criteria of intergovernmental transfer using a basic formula, and establish targets for 2006-2007; 0 As for the transfer of allocations from the Finance Ministry and the Sectors to the Districts for capital expenditure: clarify the functionality of SISTAFE for integrated district planning and for accountability at district level; 0 Conclude the Regulations for the Local Authority package of laws; 0 Continue building and rehabilitating the infrastructures of District, Administrative Post and Locality Administrations; 0 Extension of District Development Plans to 53 districts and undertake the placing of street names in 27 municipalities; In the context of rationalising their structures and providing services, all the ministries (HeaIth, Education, AgricuIture, State Administration, Industry and Trade, and Finance) are undertaking functional analyses, For 2005, it is envisaged that restructuring plans already submitted to UTRESP will be approved and a start will be made on implementing them. But some challenges remain, related with the need to ensure a detailed analysis and dialogue based on identifying the problem and drawing up concrete recommendations for the restructuring phase. As regards the professionalisation of the civil service, and administrative modernisation in order to attain the final goal of improving the quality of services provided to citizens, the following activities shall be undertaken: 0 Study of the wage policy, in which it will be important to ensure agreement on wage policy and implementation of related activities such as the integration of data bases with different forms of payment, concluded in accordance with the target and appropriate advice; 0 Make the SIP operational in a network between MAE, MF and the TA; 0 Draw up the National Policy for Managing State Documents, Records, and Archives; 0 Continue studies to allow identification of services that the state could provide electronically; 0 Start implanting the Single Counter (concentrated units of public services) in the cities of Maputo, Beira and Nampula; 0 Adopt the Mozambican Civil Service Charter; 0 Approve the General Statute of State Functionaries;  - aa - ECONOMIC AND SOCIAL PLAN FOR 2005 0 Set up the Higher Institute of Public Administration (IISAP); 0 Undertake studies aiming at the gradual introduction of e-government; and 0 Translate the explanatory text of Decree n0.15/2000,of 20 June, about the Community Authorities. In the monitoring and evaluation of PARPA, the main objective of which is to harmonise the medium and short term instruments to guarantee proper integration between PES, PARPA and the CFMP, efforts in 2005 will remain concentrated on revising PARPA. This should be undertaken through a consultative process, and incorporating cross-cutting issues, including HIV/AIDS and gender. Thus the greatest priority will go to the following actions: Inclusion of the indicators from the PAF/PES matrix in the reports on the Balance Sheet of the PES; The revision of PARPA; Integration of the cross-cutting issues (gender, HIV/AIDS and others) in the PARPA process which should be consultative; Hold a study on the social impact, and impact on poverty of the land tenure regulations. This is in line with the letter of intent between the Government of Mozambique and the IMF; Monitor the impact of district planning and financing in relation to the PARPA objectives in some districts, results from which will be published in 2006; Mainstreaming of gender into planning and monitoring; Greater harmonisation of support, including technical assistance on Monitoring and Evaluation. In the area of improving financial management and accountability, stress will be laid on the implementation of e-SISTAFE, on programme budgeting, on the reform of state procurement, tax reform and the strengthening of internal and external audits. With regard to strengthening the systems of financial and budgetary planning, one should mention strengthened management of reform, and identification of realistic objectives in the implementation of e-SISTAFE and the selection of an indicator for effective anti-poverty budgeting and budgetary execution, including provinces and districts that will be analysed in 2005 as part of PARPA II, to be introduced in 2006, conclusion of the Budgetary Execution Report for the first quarter through e-SISTAFE and publication on the Internet. In tax reform in 2005, it is planned to approve the regulations and procedures of the Tax Authority of Mozambique (ATM), progress in processing VAT  - 89 - ECONOMIC AND SOCIAL PLAN FOR 2005 reimbursements, achieving the revenue targets, and strengthening the functions of the tax administration through the computerised system. With regard to Procurement, in order to adopt a transparent and efficient system, in 2005 it is planned to implement a modern procurement system in line with best international practices, based on the new procurement regulations, and linked up with e-SISTAFE. In terms of strengthening internal and external audits, the government will start a constructive dialogue with the Administrative Tribunal, so that the two may jointly define an indicator before the end of 2004 to monitor progress in external audit activities and drafting strict monitoring of the follow-up for implementing recommendations of the priority components of the strategic internal audit strategy, which is an important factor in the work of the IGF. The need to develop an Assessment of Fiduciary Risk as a credible instrument for monitoring management of public finances, including implementation in 2005 of follow-up measures agreed during the workshop held in November 2004. In drawing up the strategy for implementation of the IAS, a study will be held to understand the implications of the IAS on fiscal policies and regulations, supervise the insurance sector using the new plan of accounts, and prepare the study on transition to the IAS. Develop and implement a plan for restructuring EMOSE. Prepare regulations on complementary (private) pensions, and revise the Law on Social Protection. To strengthen the institutional capacity of the Bank of Mozambique and other regulatory authorities, for 2005 the issuing and implementation of the LICSF regulations are planned. In the area of micro-finances, it is envisaged that regulations on micro-finance will be implemented, with attention paid to sustainability, and the finalisation and implementation of the strategy to regulate investment by public companies. The insurance sector will also be improved and the social protection system strengthened. It is planned to submit to parliament the bill on social protection, and to begin the actuarial study on the social security system. In the area of Good Governance and the Fight against Corruption, it is planned to draw up and approve the anti-corruption strategy, and begin implementing it based on the data from the National Research on Governance and Corruption (analytical report of the research). Publication of the first study, which is related with the survey on corruption in the justice system, and identification of the other institutions to be covered by the study.  - 90 - ECONOMIC AND SOCIAL PLAN FOR 2005 Efforts will also be made to reactivate the State Administrative Inspectorate (IAE). In the sphere of Justice in 2005, efforts will continue to be made to implement the Integrated Strategic Plan, with the aim of simplifying procedures and increasing efficiency in the provision of services by the judicial system. By components, the main actions are: Strateqv for Inter-Institutional Development and Communication 0 lnstitutionalise the Legality and Justice Coordinating Council; Conclude the vision document and the ensuing revision of the PEI and POPEI; Draw up a harmonised Monitoring and Evaluation system; Hold a training seminar in Maputo for 50 staff of the Ministry of Justice on questions of statistics, planning and monitoring; Make technical support visits on planning and monitoring to the provinces. Strategy on Access to Justice 0 Establish the conditions for the community courts to operate; Entry into operation of Commercial Sections in the Maputo City Law Court: Creation of two more sections to settle commercial questions; Hold a seminar to harmonise the creation of dispute settlement mechanisms; 0 Draw up and distribute 1,000 copies of a brochure on Human Rights in the southern, central and northern zones. Hold 3 sessions on human rights for 1,000 people in districts to be selected; 0 Development plan for the areas of administrative and customs disputes, including the reorganisation of registry offices, rules and procedures; 0 Increase efficiency in the provision of services by the judicial system, through: o Increasingthe number of verdicts by 42% in comparison with 2002; o Reducing the number of prisoners awaiting charge and trial, so that a maximum of 57% of prisoners are awaiting trial. Training Strategy Initial training of 14 Judges, 7 Prosecutors, 5 Registrars, and 5 Notaries; 0 Training of 60 Law Officers and 5 Judicial Assistants;  -91 - ECONOMIC AND SOCIAL PLAN FOR 2005 Complementary training of 10judges and 10 prosecutors; 0 Training of 10judges and 3 prosecutors in commercial matters; 0 Establishment of a Professional Institute of Auditors for the bodies of internal and external control -viability study. Legal Reform Strateav 0 Draft reform of the Civil Procedural Code; 0 Draft reform of the Inheritance Law; 0 Draft reform of the Notarial Code; 0 Draft reform of the Organic Law on Law Courts; 0 Draft Organic Law on Community Courts; 0 Draft Organic Law on IPAJ; 0 Draft Organic Law on the Administrative Tribunal; 0 Concluding the draft law on prison organisation; 0 Draw up a revision of the Real Estate Registration Code (seeking to improve the financial environment); 0 Draw up a revision of the Automobile Registration Code (seeking to improve the financial environment); 0 Draft the Code on Bankruptcies and Recovery of Companies (seeking to improve the financial environment); 0 Concluding the draft Organic Law on the Prison Guards of Mozambique; 0 Law on Protecting Children; 0 Law on Trafficking in Migrants; 0 Drawing up a bill on Trafficking in People, particularly Women and Children. 0 Drawing up a bill on Trafficking in Arms, their components, and ammunition; 0 Concluding the bill on Extradition and International Cooperation and delivering it to CIREL; 0 Drafting a bill on organised, cross-border crime; 0 Drafting a bill on terrorism. 3 0 Continue building open Prison Centres through the pilot self-build project;  - 92 - ECONOMIC AND SOCIAL PLAN FOR 2005 Continue building the Beira and Xai-Xai prisons; Start the construction of new buildings for the Attorney-General's Office and for the Law Courts in Inhambane, Zambezia, Maputo and Niassa provinces and Maputo City; Continue rehabilitating the Maputo Central Prison and the penitentiaries of Mabalane, Nampula and Manica; Conclude building the registry office in Mopeia (Zambezia); Acquire and distribute to the prisons 30 television and video sets for use by the inmates; Undertake a diagnostic study on the costs of rehabilitating the main prisons; Undertake a classified inventory of the assets of the Prison System. Legal Documentation Strategy 0 Project to Reproduce the Codes - CP, CPP, CC, CPC, and CE; 0 Acquire 50 copies of the main legislation on the civil service and distribute them to the sectors of the Ministry of Justice. Modernisation and Computerisation Strategv Design and start establishing software for information on prisoners and for the registry and notarial offices. Human Resource Strateav Recruit and select so that that the staff table of the provincial law courts is 90% complete by the end of 2005; 0 System of inspection and control of the Ministry of Justice human resources. Hold a training course for National and Provincial Directors on performance control and career progression; 0 Recruitment of 20 magistrates with university degrees. Control of legality 0 Select investigators and inspection staff for the Public Prosecutor's Office; 0 Select investigators, magistrates, experts and staff for the Central Anti- corruption Office; 0 Regulations and decree on inspection.  - 93 - ECONOMICAND SOCIAL PLAN FOR 2005 Other actions in the iustice sector 0 Undertake a diagnostic study on the HIV/AIDS situation in the prisons; 0 Produce educational material on HIV/AIDSfor prisoners; 0 Hold sessions on HIV/AIDS for prisoners. In the sphere of Public Order, one of the priority objectives is to improve the capacity of the Police to prevent and pursue crime. In 2005, the following actions will be undertaken: Strengthen and guarantee the protection and security of people and property; 0 Expand the Community Policing programme; 0 Build the following premises: Civil Identification Directorate of Inhambane, District Police Command of Muembe, Fire Brigade command in Tete, District Police Command of Nicoadala, District Police Command of Mossuril, Building of DIC - Cab0 Delgado, and District Police Command of Meluco; 0 Rehabilitation of the Matalane Centre, the Maputo City PIC building, the Nampula PIC Laboratory, the Maputo Civil Prison, the Top Security Prison (BO), the Tete provincial immigration services, and the Sofala DIC building; 0 Introduction of biometric passports. V.4. FOREIGN RELATIONS AND DEFENCE In the area of Foreign Relations, the government will pursue and increase privileged relations with all Mozambique's development partners, in order to make its plans and programmes operational, publicising the country's potential, mobilising means and resources to carry out the government`s Five Year Programme, and to eradicate absolute poverty, and strengthening the prestige and standing of Mozambique in the international arena. Thus the government will undertake activities that seek to strengthen existing relations of friendship and cooperation and give fresh impulse to the joint cooperation commissions and the annual consultations with other countries. Likewise, the government will continue to widen the universe of partnerships with other countries and organisations in order to implement the 2005 Economic and Social Plan. Thus the government will:  - 94 - ECONOMIC AND SOCIAL PLAN FOR 2005 0 Prepare and organise official and working visits abroad by the Head of State, to strengthen bilateral cooperation; 0Organise participation by the Head of State at Summits, Conferences and other relevant events; 0 Hold working and official visits and participation in international conferences by the Minister of Foreign Affairs and Cooperation and other government members; 0Analyse the government's diplomatic activity, draw up perspectives for future activity and rationalise diplomatic and consular representation abroad, so as to make these representations better able to perform their duties; 0 Study the practice of multiple accreditation for greater presence and diplomatic coverage; 0 Continue to negotiate with partners for the total forgiveness of Mozambique's foreign debt, both in the context of the Club of Paris, and through bilateral understandings with other countries that are not members of this group; 0 Undertake activities in the areas of negotiation, conclusion and ratification of international conventions and treaties, bilateral agreements and their consequent incorporation into the national legal order; 0 Disseminate information about business opportunities in Mozambique; 0 Speed up identification and implementation of the priority national, sub- regional and regional development programmes and projects, in the context of NEPAD; 0 Ensure implementation of SADC protocols, particularly the Trade Protocol, and facilitate the free circulation of people; 0 Look after the defence of national interests in the framework of negotiating Economic Partnership Agreements (EPAs) between SADC and the European Union, seeking to strengthen regional integration and consequent integration into the world economy; 0 Participate in the negotiations on the multilateral trade system, through the World Trade Organisation; 0 Continue monitoring and evaluating projects financed by cooperation partners, through visits to the provinces; e Continue working to assist Mozambican communities in the diaspora, and promoting their involvement in the country's political, economic and social life:  - 95 - ECONOMICAND SOCIAL PLAN FOR 2005 0 Continue negotiations on demarcating the maritime border, and reaffirming the land borders with the neighbouring countries; 0 Draw up the draft Cooperation Policy of the Republic of Mozambique. In the area of Disaster Management, the government will: 0 Readjust the National Disaster Management Plan, and strengthen mechanisms for coordination and response to disasters among the countries of southern Africa; 0 Mobilise resources for the prevention and mitigation of disasters; 0 Map areas at risk of disasters; 0 Step up training activities and civic education among the people vulnerable to disasters; 0 Strengthen the resources allocated to the disaster early warning system; 0 Sign regional agreements on mutual assistance in the event of disasters. In the area of Demining, the government will: 0 Hold, in coordination with the donors, the annual meeting with the demining operators, with the participation of the provincial governments and other stakeholders in demining, seeking to draw up strategies for the activity of the IND; 0 Continue the study on the socio-economic impact of demining in Mozambique. In the area of support for refugees, it is intended to set up INAR representation in Cab0 Delgado, Nampula and Tete. In the area of Defence, the following activities will be undertaken in 2005: Approve the package of complementary legal diplomas, particularly the Strategic National Defence Concept, the Equipment and Weaponry Policy, the draft amendments to the Law on Military Service and its respective Regulation, the draft revision of the Military Fee, and the bill on Honours and Decorations; 0 Establish, maintain and expand the conditions for access by citizens to military service; Raise the capacity and combat readiness of the Mozambican Armed Forces for the defence of the country, and compliance with peace-keeping missions; 0 Continue participation in peace-keeping missions, particularly in the Democratic Republic of Congo, Timor, Burundi and Sudan;  - 96 - ECONOMICAND SOCIAL PLAN FOR 2005 aGuarantee that FADM officers will be sent to courses on peace-keeping and for military observers; aContinue to ensure the FADM's participation in efforts at cooperation and regional integration, at continental and international level, as regards the harmonisation of defence and security mechanisms; eGradually reduce external dependence in the training of military technical staff; aImplement the new Organic Diploma of the Ministry of Defence in the light of Presidential Decree no 4/2003, of 27 December, and continue the restructuring of the military area and the modernisation of the FADM; aEstablish the necessary conditions for the Nampula Military Academy to begin functioning; aStrengthen the training of soldiers for participation in humanitarian missions, mainly in rescuing the public in cases of natural disasters and other missions of public interest; aGuarantee the continued operation of the CPLP Strategic Analysis Centre in Maputo, as a project to strengthen military cooperation between the member countries; a Prepare and participate in military exercises and manoeuvres in the context of SADC and the CPLP; a Participation at SADC and African Union level in the work of the technical teams appointed to draw up the legal instruments for the African Union and SADC Region Defence and Security sector; a Guarantee the maintenance and functioning of the current five Military chancelleries (Spain, Malawi, Portugal, Russia and Tanzania) to ensure the continuity and expansion of the gains in the military area resulting from the close relations with the military of these countries, and open three more Military Chancelleries in South Africa, the USA and China; a Incorporate 1,200 young people into the ranks of the FADM, for the necessary renewal of the military, ensuring the demobilisation of those conscripts incorporated in 2003; a Ensure that classification and military inspection of the recruits are carried out during the various stages of their incorporation; 0 Rehabilitate, equip and maintain degraded defence infrastructures, particularly military hospitals, barracks, and training centres, among others.  - 97 - ECONOMIC AND SOCIAL PLAN FOR 2005 VI. BUDGETARY POLICY Budgetary policy in 2005 will continue to be guided so as to achieve the objectives laid down in the government programme, which seeks to maintain sustainable and inclusive economic and social development, resting on increasing rigour and rationality in the use of public resources, and in ensuring public awareness to pursue the poverty reduction strategy. To achieve this objective, it will be essential to maintain an environment of macro-economic stability characterised by reduction in the main macro-economic imbalances, by the continual mobilisation of internal and external resources to finance development programmes, and to ensure their sustainability. Thus, for 2005, measures will be taken that seek to increase the availability of resources and improvement of the economic environment in order to allow our economy to compete with the outside world. STATE BUDGET 109 MT - Achieved Planned % of GDP 2004 2005 2004 2005 EXPENDITURE 32,507 44,932 25.9% 31.O% Recurrent Expenditure 18,899 22,604 15.1% 15.6% Capital Expenditure 12,881 19,001 10.3% 13.1% Net Loans 727 3,326 0.6% 2.3% FUNDING: 32,507 44,932 25.9% 31.0% Revenue 16,562 22,226 13.2% 15.3% Grants 10,918 11,544 8.7% 8.0% Transf. BM HlPC 484 368 0.4% 0.3% Net External Credit 4,791 7,875 3.8% 5.4% Net Internal Credit -248 2,919 -0.2% 2.0% Public sector reform and administrative and financial decentralisation should constitute strong challenges for 2005. Making operational the Law on Local State Bodies, which transforms districts into budgetary units, consolidating implementation of the Law on State Financial Administration, and modernization of our administrative apparatus will be fundamental for greater fiscal discipline, transparency, efficiency and effectiveness in the use of public resources.  - 98 - ECONOMICAND SOCIAL PLAN FOR 2005 State Revenue State revenue in 2005 could reach 22,174.1 billion meticais, equivalent to about 15.3% of GDP. Of this sum, 21,492.4 billion meticais is recurrent revenue, while 681.8 billion meticais is capital revenue. The figure for recurrent revenue means an increase of 30.5% over what was collected in 2004. This forecast rests on assumptions of a favourable economic growth, broadening of the tax base, and improvements in the efficiency of the tax administration. The recurrent revenue of 21,492.4 billion meticais envisaged is equivalent to about 14.8% of GDP, which is 0.8 percentage points (pp) higher then the previous year. Included in this category are fiscal revenue, non-fiscal revenue and earmarked revenue. Achieved Planned % of GDP STATE REVENUE i o 9 MT - 2004 2005 2004 2005 FISCAL REVENUE 14,435 18,409 11.5% 12.7% Taxes on income 3,470 4,694 2.8% 3.2% Taxesongoodsandservices 7,575 9,520 6.0% 6.6% Taxes on foreign trade 2,218 2,765 1.8% 1.9% Other taxes 1,172 1,430 0.9% 1.O% NON-FISCAL REVENUE 779 1,388 0.6% 1.O% EARMARKEDREVENUE 1,290 1,747 1.0% 1.2% CAPITAL REVENUE 59 682 0.0% 0.5% TOTAL 16,562 22,226 13.2% 15.3% Non-fiscal revenue could reach 1,411.9 billion meticais, about 1.0% of GDP, an increase of 0.4 pp compared with the previous year. This increase is mainly due to the inclusion in this heading of the own revenue of district administrations and central institutions. Earmarked revenue will record a major increase in 2005, compared with 2004, rising from 282.3 to 1,673.6 billion meticais. This increase results from application of the decree approving the fuel tax regulations, and increased collection of this revenue by the fiscal administration. When compared to GDP, this revenue rises from 0.2% of GDP in 2004 to 1.2% in 2005. Capital revenue should increase substantially, due to concessions for prospection and exploitation of the country's mineral resources, particularly of the Moatize coal. In this area the government always took into account the need to guarantee sustainable exploitation. Thus, in 2005 the collection of 681.8 billion meticais is envisaged, against 188 billion collected in 2004.  - 99 - ECONOMIC AND SOCIAL PLAN FOR 2005 To attain these revenue targets, various activities will be undertaken, among which the following stand out: In the area of internal organisation: Modernise the apparatus of the Tax Administration, through setting up the General Tax Directorate (DGI); Consolidate the system of attributing the Single Tax Identification Number (NUIT) which will allow improvements in controlling compliance with the obligations of taxpayers, and of monitoring the various economic activities, resulting in an increase in revenue; Apply the system of automatic daily transfer of revenue collected to the Treasury, in order to improve management of the State Treasury; Consolidate the functioning of the Tax Training Centre with the purpose of upgrading the skills of tax administration staff, seeking improved attendance to taxpayers; Rescale fiscal areas and create new fiscal areas, as well as setting up the Taxpayers' Information Service, which seeks to provide more information to taxpayers and make it easier for them to fulfill their fiscal obligations; Computerise taxes in order to improve management and simplifying procedures in the provision of services to taxpayers by the tax administration; Implement specific legislation that regulates the functioning of the tax administration and its staff table; Computerise tax processes; Make the fiscal tribunals autonomous. In the area of customs supervision Apply the new procedures concerning the international transit of merchandise, which will guarantee greater control capacity; Step up anti-contraband operations in all parts of the country; Continue to make sure that the infrastructures of the central and northern regions are adequate for installing the VSAT communications system and RENA (computerised national customs network); Hold post-customs clearance audits in the framework of implementing the merchandise valuation agreement of the World Trade Organisation; Support rapid installation of Scanners in the main ports and terminals and in establishing the Ressano Garcia dry port, in order to ensure security and facilitation of trade;  - 100- ECONOMIC AND SOCIAL PLAN FOR 2005 Formulate and implement a programme of taxpayer education, so that taxpayers voluntarily comply with their fiscal obligations; 0 Analysis and continual assessment of systems with a view to simplifying procedures; 0 Coordination with other Mozambican and regional institutions in order to protect the health of staff and their families, as a priority measure in preventing and fighting against HIV/AIDS. In the area of infrastructures 0 In Tete - rehabilitate the Zobue frontier post, and build an international road terminal in Tete city; 0 In Niassa - rehabilitate and build residences in Mandimba; 0 Start construction and rehabilitation work in the following places: > In Maputo province - build a border complex at Ponta do Ouro; > In Cab0 Delgado - construct the building, offices and housing at the Namoto Fiscal Post; > In Nampula, start the 2nd phase of building the Nacala residential complex. In the area of internationalcooperation and facilitating legitimatetrade Align national legislation to international conventions, particularly the Kyoto Convention of the simplification of customs procedures; 0 Facilitate regional trade by implementing bilateral agreements with the countries of SADC, particularly with Zimbabwe; 0 Strengthen cross-border security by revising and implementing memoranda of understanding with the neighbouring countries; 0 Consolidate mechanisms of cooperation and consultation with the countries of the region in the exchange of information capable of restraining tax evasion in inter-regional trade. State expenditure Total state expenditure should reach 46,731.6 billion meticais. Of this sum, 41,553.76 billion meticais constitutes the effective state expenditure to implement the activities envisaged in the Economic and Social Plan and 5,177.84 billion meticais concern financial operations - that is, they are resources destined to amortise public debt (internal and external) and channelled to public companies, or companies with a state holding, through agreements of retrocession.  -101 - ECONOMICAND SOCIAL PLAN FOR 2005 Staff costs consume the greatest part of total recurrent expenditure total. They represent 48.8% of total recurrent costs. They are followed by expenditure on goods and services, with 23.5% and current transfers with 17.7%. Achieved Planned %of GDP RECURRENTEXPENSES i o 9 MT - 2004 2005 2004 2005 Staff expenditure 9,195 11,045 7.3% 7.6% Goods and services 3,966 5,308 3.2% 3.7% Debt servicing 1,213 1,284 1.0% 0.9% Currenttransfers 3,555 4,003 2.8% 2.8% Subsidies 208 222 0.2% 0.2% Other recurrentexpenditure 581 603 0.5% 0.4% Past financial years 0 0 0.0% 0.0% Capital Expenditure 126 0 0.1% 0.0% Complementary period 0 0 0.0% 0.0% TOTAL 18,899 22,604 15.1% 15.6% TOTAL EXCL. DEBT SERVICING 17,686 21,321 14.1% 14.7% Staff costs should reach 11,051.9 billion meticais, about 7.6% of GDP, which is a growth of about 0.1 pp of GDP compared with 2004. This growth, as mentioned above, is intended to face the costs inherent in admitting staff, in promotions, progression along career structures, and wage increases resulting from the negotiations between the government, employers and trade unions held every year. The goods and services line will record a real increase in comparison with 2004, reaching about 3.7% as against 3.0% of GDP in 2004. In absolute terms, this sum is 5,319.7 billion meticais, and is intended to deal with the physical expansion of the main areas of action in the fight against poverty, including Education, Health and Infrastructures. Apart from the costs arising from the capital expenditure under way in these areas, this sum is intended to finance the goods and services that are indispensable for the functioning of existing public institutions, such as schools and hospitals. In 2005, debt servicing should reach 1,283.7 billion meticais, compared with 1,228.0 billion in 2004, which is a slight drop of 0.1% of GDP. This trend is the result of the government's policy to pursue budgetary sustainability, which involves controlling the levels of the state's indebtedness, and the consequent debt servicing. For 2005, public capital expenditure is fixed at 18,927.4 billion meticais, corresponding to 13.1% of GDP, a growth of 2.0 pp compared with the previous year. Of this sum, 30.1% is funded by internal resources, and the remaining 69.9% by external resources provided directly to public investment projects.  -102 - ECONOMIC AND SOCIAL PLAN FOR 2005 Achieved Planned % of GDP CAPITAL EXPENDITURE - i o 9 MT 2004 2005 2004 2005 Internal Financing 4,074 5,763 3.3% 4.0% External Financing 8,807 13,239 7.0% 9.1% Grants 6,356 7,573 5.1% 5.2% Loans 2,451 5,666 2.0% 3.9% Complementary Period 0 0 0.0% 0.0% TOTAL 12,881 19,001 10.3% 13.1% Implementation of expenditure in the PARPA priority sectors During the period 2000-2004, on average the government allocated about two thirds of total available resources to the PARPA priority sectors. For the term of office now starting, continuation of the same volume of resources for these sectors is expected.  - 103- ECONOMIC AND SOCIAL PLAN FOR 2005 2003 2004 2005 CGE Achieved Plan Total expenditure (recurrent and capital) 26,821.3 31,780.2 41,605.5 Interest on public debt 1,318.2 1,212.9 1,283.7 Total expenditure excl. Debt interest 25,503.2 30,567.2 40,321.9 Priority Areas Education 5,149.7 6,638.9 7,480.8 General Education 4,345.1 5,671.2 5,789.5 Higher education 804.6 967.7 1,691.3 Health 2,709.0 3,495.8 4,999.5 HlVlAlDS 80.5 127.1 267.6 Infrastructures 3,540.4 3,495.8 7,528.8 Roads 2,816.2 2,796.7 5,703.3 Water and PublicWorks 724.2 699.2 1,825.5 Agriculture and Rural Development 1,260.6 1,366.5 1,684.3 Governance, security andjudicial system 2,387.1 2,987.3 3,893.0 Governance and public administration 482.8 476.7 856.3 Security and publicorder 1,421.5 1,779.7 2,072.9 Judicial system 482.8 730.9 963.8 Other priority sectors 1,046.0 1,048.7 896.4 Social action 187.7 190.7 258.4 Labour and employment .~ 80.5 127.1 132.9 Mineral Resources and energy 777.8 730.9 505.1 TOTAL priority areas 16,173.3 19,160.3 26,750.2 As Yoof total expenditure(exl. Financialoperations and interest payments) Education 20.2% 21.7% 18.6% General education 17.0% 18.6% 14.4% Higher education 3.2% 3.2% 4.2% Health 10.6% 11.4% 12.4% HIV/AIDS 0.3% 0.4% 0.7% Infrastructures 13.9% 11.4% 18.7% Roads 11.O% 9.1% 14.1% Water and publicworks 2.8% 2.3% 4.5% Agricultureand rural development 4.9% 4.5% 4.2% Governance,security andjudicial system 9.4% 9.8% 9.7% Governanceand public administration 1.9% 1.6% 2.1% Security and public order 5.6% 5.8% 5.1% Judicial system 1.9% 2.4% 2.4% Other prioritysectors 4.1% 3.4% 2.2% Social action 0.7% 0.6% 0.6% Labourand employment 0.3% 0.4% 0.3% Mineral resourcesand energy 3.0% 2.4% 1.3% PARPA prioritysectors 63.4% 62.7% 66.3% Note: CGE = General State Accounts The table shows the evolution of expenditure in the priority sectors and a forecast for 2005. As may be noted, total expenditure in the priority sectors will amount to 66.3% of total expenditure, excluding debt servicing and financial operations. The largest sums in running costs are concentrated in the priority areas for fighting poverty. Because of the large number of staff they employ, education and  -104- ECONOMICAND SOCIAL PLAN FOR 2005 health account for the greatest amount of resources for staff and for other costs required for the operations of schools and hospitals. The following graph shows the distribution of total expenditure among the priority sectors: Composition of expenditure on the PARPA priority sectors, 2005 Governance, Other Securityand priority Judicial Education 15% 28% Health I 20% structuresJ 28% Budgetary balance sheet I I BUDGETARY Result Planned % of GDP I FRAMEWORK 10 'MT 2004 2005 2004 2005 REVENUE 16,562 22,226 13.2% 15.3% RECURRENTEXPENDITURE 18,899 22,604 15.1% 15.6% CAPITAL EXPENDITURE 12,881 19,001 10.3% 13.1% NET LOANS 727 3,326 0.6% 2.3% OTHER REVENUE (-)/EXPENDITURE (+) 0 0 0.0% 0.0% TOTAL EXPENDITURE 31,780 41,606 25.4% 28.7% TOTAL EXPENDITURE INC. NET LOANS. 32,507 44,932 25.9% 31.O% CURRENT BALANCE -2,337 -379 -1.9% -0.3% OVERALL DEFICIT BEFORE GRANTS -15,945 -22,706 -12.7% -15.7% GRANTS 10,918 11,544 8.7% 8.0% OVERALL DEFICITAFTER GRANTS -5,027 -11,162 -4.0% -7.7% TRANSFER FROM BM TO HlPC 484 368 0.4% 0.3% LOANS 4,791 7,875 3.8% 5.4% Disbursements 5,376 8,696 4.3% 6.0% Amortisations -585 -820 -0.5% -0.6% NET INTERNALCREDIT -248 2,919 -0.2% 2.0%  - 105 - Lo 0 0 cv 0 fx b P 3 LL z 4aI -I 4 m 3 c 0 5 0 0 cn n Z a 0 z 0 z 0 0 W  - 106 - m 0 0 c\l CL P 0 g 3 3 u, *) U ?i Z 4a J 2 J 5 0 0 I/) n Z a 0 5 0 z 0 0 - W .-C0 c0 .-m e .-m t 0 83 .-a,cam a 0  - 107- rT) 0 0 hl i of F3 0 LL 3 Z 4a i - z! 5! N N *) N G - 0 CT) n z a 0 0 2 z 0 0 W  - 108- l.0 0 0 cv fx 0 LL Z 4a aQ0 5 c N b m N v> n z L a P =a, 0 .-3 v) 2 0 9a Z m 0 m v) 0 I W fn U n3 sO c0 c 0 X  - 109- m 0 0 cu 0 LL z 4a (D m - 2 t T3i 0 CT) n z a 0 z 0 Z 0 0 zm w I Ei a F U , m L e I