Mozambique - Country assistance strategy progress report : Chairman's concluding remarks

MOZAMBIQUE: COUNTRY ASSISTANCE STRATEGY PROGRESSREPORT CHAIRMAN'SCONCLUDINGREMARKS Meeting of the Executive Directors March 21,2006 The Executive Directors welcomed the joint IDA/IFC/MIGA Country Assistance Strategy Progress Report for Mozambique. Directors commended the authorities for their successfulmacroeconomic management and reforms, which had resulted in continued strong economic growth and poverty reduction in recent years.They also notedthetangibledevelopmentresultsachievedthroughimplementationof Mozambique's Plan fortheReductionofAbsolutePoverty(PARPA).Directorswelcomedthe government'sincreasedownershipof its developmentprioritiesandenhanceddialoguewith its development partners. They noted that harmonization has led to a more efficient allocation of the Government's and donors' resources to the priority sectorsof the country'spoverty reduction plan, buturged further effortstodeepentheharmonizationagenda.Directorsnotedthatprogresshas been made in strengthening the legal and institutional framework to address corruption, as well as concrete actions includingthe completion and disclosureof a Governance Survey, which found that Mozambique ranks above countriesin the same income brackets for control of corruption, but lags behind in this area if compared to the regional average. While demand for governance reform and participation are being promoted by greatergovernmentaccountabilityatthecentralandlocal levels, including with targeted support from the Bank, it was noted that government needs to pay greater attentionto these issues. Directors reiterated their support for the strategic priorities outlinedin the CAS, which was confirmed in the CAS Progress Report, and reflected the country's development objectives set out in the PARPA, and confirmed in PARPA 11.At the same time, Directors expressed concern about the over-optimism of theCASandthe country's highdependence on aidfinancing for its development needs andon large scale economic projects. With regard tothe latter, several Directors urgedtheGovernment to diversifyintoothersectorssuchasagricultureandtourismaswellas devote greater attention to supporting small and medium-sized enterprises (SMEs) as partofthe effort to create a stronger business environment. Directors noted with concern the sharp increasein theincidence of HIV/AIDS.TheyurgedtheBanktoplayastrongerroleinthefightagainst HIV/AIDS. The needfor greater Bank supportin the areasof trade and rural development was also highlighted. Finally, noting theeffectiveBank Group coordinationin support of investments and private sectordevelopmentinMozambique,Directorsstressedtheneedforacoordinatedsupportin capacity buildingtargeted to meetcountryneeds.Theyalsoemphasizedtheimportance of continued strengthening of monitoring and evaluation systems, and enhanced harmonization with other partners.