Mozambique - Interim poverty reduction strategy paper and assessment

20543 INTERNATIONAL MONETARY FUND AND THE INTERNATIONAL DEVELOPMENT ASSOCIATION REPUBLIC OF MOZAMBIQUE Assessment of the Interim Poverty Reduction Strategy Paper Prepared by the Staffs of the International Development Association and the International Monetary Fund Approved by Masood Ahmed and Callisto Madavo (IDA) and Jose Fajgenbaum and Anthony Boote (IMF) March 27, 2000 1. The Interim Poverty Reduction Strategy Paper (Interim PRSP) prepared by the Mozambican authorities consists of the National Action Plan for the Reduction of Absolute Poverty (Plano de Acqdo para a Reduqdo da Pobreza Absoluta - PARPA) and a companion document which briefly summarizes the PARPA and sets out the steps to be taken towards the finalization of a full PRSP. The two documents should be read together. 2. Government commitment to poverty reduction. The Mozambican government has demonstrated strong conrmitment to poverty reduction since the civil war ended in 1992, when it embarked on a sustained effort of reconstruction, reconciliation, and democratization. The PARPA is the result of a series of poverty reduction initiatives, dating from the first poverty reduction strategy published in 1995, and building on the results of the First National Poverty Assessment (1998). In April 1999, the Council of Ministers approved an updated strategy, entitled 'Action Guidelines for the Eradication ofAbsolute Poverty'. The PARPA, which was completed in December 1999, is a step towards the operationalization of the 'Guidelines'. The PARPA is a public document, with strong ownership within government. It will be developed further during the coming months, as a result of consultations within the government and with civil society. 3. Poverty analysis. To better understand poverty, Mozambique undertook a national, representative household survey of living conditions in 1996-97, which was the basis for a detailed analysis of the characteristics and causes of poverty in the First National Poverty Assessment. Poverty data are also available for 1996-98 in a demographic and health survey, participatory poverty assessment and census. The 'Guidelines' and the PARPA summarize the main results of the National Poverty Assessment, which depict a country with severe structural obstacles to poverty reduction - a predominantly rural society with high dependence on low productivity agriculture, poor physical infrastructure, weak market integration, low levels of human development, and poor access to services. The analysis is FILE COPY  sound, it covers income and non-income dimensions of poverty, and provides the basis for targeting key vulnerable groups. However, the link between poverty analysis and policy choices, implicit in the discussion of the poverty profile and its determinants, the identification of priority target groups, and the sectoral objectives and targets, should be made more explicit in the full PRSP. 4. Poverty-reduction policies. The government has set a target of a 30 percent reduction in absolute poverty within the next decade (2000-09) or 15 percent by 2004. Most of the planning targets refer to the period 2000-04. The main components of the strategy to achieve the poverty reduction target are: economic stability and broad-based high growth (based on the development of manufacturing and construction and increased agricultural productivity); human development (improved access to education, health, water, and sanitation); the development of rural infrastructure; promotion of employment and self- employment; protection of vulnerable groups; and capacity building in poverty research and monitoring. Better utilization of available resources and a reduction in regional inequality are also stressed. 5. The emphasis on broad-based high growth and human development, focusing particularly on rural areas, is appropriate. The government has a good record of sound macroeconomic policies and some well-developed sector programs in education, health (including HIV/AIDS), agriculture, and roads, with multi-donor support. The PARPA provides links to these and other key sector programs, which are important vehicles for the implementation of the poverty reduction strategy, and presents the sectoral objectives, proposed indicators, and targets for the period 2000-04. The PARPA identifies areas that require and will receive attention for fiurther research - regional inequality, sectoral growth strategies, and the effect of HIV/AIDS on population growth. This policy research program will also include studies of the impact of trade policy on poverty and should be widened to consider the need for any special programs on disaster mitigation in the wake of the floods. It should also encompass an evaluation of alternative policies, such as that already undertaken of the safety net programs, to determine the most appropriate and cost-efficient interventions. Detailed costings of the different programs are not yet available, so it is not clear what choices and trade-offs will be involved, nor how the private sector and NGOs will contribute to these programs. However, in the PARPA, the government states its commitment and underscores its ongoing efforts to cost its poverty reduction strategy and link it to the medium-term expenditure framework, in order to ensure the fiscal viability of the poverty reduction targets. 6. Three-year macroeconomic framework and policy matrix. In June 1999, Mozambique adopted a three-year macroeconomic framework and policy matrix, under the new PRGF arrangement. The PARPA was based on this framework, but it is now out of date, given the recent floods. A new framework and matrix will be prepared for the discussions on the second-year PRGF-supported program later in 2000. This will be further modified for use  - 3 - in the full PRSP, in the light of ongoing policy analysis, evaluations of the fiscal effects of the post-flood reconstruction, and the consultation process. 7. Consultation. The weakest part of the interim PRSP is the brevity of the description of past and planned consultations. There has been limited consultation on the 'Guidelines' and the PARPA as yet, but the government is committed to conducting broad consultations in the development of the full PRSP. Section 5 of the companion document sets out a general approach for involvement of the private sector, civil society organizations, research institutions, and the media, and a plan for its elaboration over the coming months. In this context, it should be noted that the high electoral turnout for the recent national elections demonstrated a considerable width of political participation among the population. Following the elections, the government's initial priority is to conduct a dissemination/consultation process within government to increase knowledge of and support for the PARPA, both horizontally between line ministries and vertically between central and regional governments. A strategy will also be elaborated for wider consultation with the key groups mentioned above. The government plans to have the strategy in place by the end of April and to start consultations from June onwards. The full PRSP should document the ways in which the consultation has been carried out and how the results have been reflected in the PARPA. It should be noted however, that broad-based consultation on specific aspects of pro-poor policy is likely to be a challenge in a population with high illiteracy rates (59 percent of men and 81 percent of women) and limited knowledge of the official language. 8. Poverty monitoring. Considerable effort has been made to translate the general goals of the PARPA into measurable objectives and targets, some of which will serve as indicators for the full PRSP (see part 4 of the PARPA) . A core list of annual and five-year indicators is set out in part 5, and the National Institute of Statistics will publish data on selected social indicators in May of this year. The government plans to refine and reduce the list as part of the PRSP process, and is currently developing mechanisms for updating key socio-economic indicators more frequently, with lighter surveys. It will be important that an effort be made to limit the number of indicators in line with monitoring capacity and to select those that best reflect progress towards the poverty reduction objectives and progress against known constraints. Additional work is also needed to identify the roles of different institutions in statistical data collection and poverty monitoring and to coordinate data collection and analysis on a regular basis. Ways in which civil society can be involved in the monitoring process should also be identified. A monitoring strategy is to be developed to address these issues during the coming months, and the full PRSP should include details of its implementation. In the medium term, an integrated national household survey should be repeated and the results compared with the baseline of 1996-97. 9. Timeframe. The Government's timeline envisages the completion of the full PRSP by March 2001. This timeframe was determined by the Mozambican authorities, in order to produce a high quality full PRSP, taking into account the expected completion dates of the analytical work described in the Interim PRSP. The PRSP process itself is envisaged to be an  - 4 - ongoing one, with many elements subject to continuing improvements - the consultation process, costing and budgeting, and the institutional setup for poverty analysis, monitoring, and policy implementation. It is important to note that these plans were drawn up prior to the floods, and the phasing of some activities may need to be adapted accordingly. 10. Institutional issues. The Department of Macroeconomic Planning within the National Directorate of Planning and Budget of the Ministry of Planning and Finance has responsibility for the PARPA, with support from the Department of Studies in the same Ministry. It has worked with an inter-ministerial taskforce involving eight ministries and institutes. The Department has been in existence for many years and is equipped for poverty analysis and design, but will need to strengthen its implementation capacity, especially in consultation and monitoring. Statistical and participatory monitoring capacity will also need to be strengthened in the line ministries. However, there is a risk of overloading in these Departments, where technical capacity is already thin. The government has taken strong ownership of the PRSP process and is funding much of the necessary incremental work on poverty analysis from its own resources; it would consider additional external assistance if necessary. Part of the additional budgetary resources freed under the HIPC Initiative will be allocated to work on poverty analysis and monitoring in the Department of Macroeconomic Planning, as part of the development of the full PRSP. Public sector accountability has been improving recently with the preparation of a plan to overhaul the public accounting system, and helped by new civil service employment incentives, regulations, and training. 11. Conclusion. The major strengths of Mozambique's poverty reduction strategy are (i) the government's high level of commitment to it over a long period of time, which has enabled capacity to be built amongst a key group within the government, (ii) the existence of a high quality poverty analysis, which underpins the strategy and will serve as a baseline for monitoring future poverty reduction outcomes, and (iii) policy continuity and commitment in key areas, such as macroeconomic management and the social sectors. Although plans for consultations have yet to be spelled out in greater detail, the government is expected to expand its previous experiences when it proceeds to organize the consultations with a broad spectrum of civil society that will lead to the full PRSP. The budgeting processes that should underpin the full PRSP and the establishment of a transparent and efficient poverty monitoring system should also receive priority attention in the coming months. 12. Overall, the staffs consider that the present document provides a sound basis for the future development of a full PRSP, as well as an adequate framework for the enhanced HIPC Initiative decision point and for Fund and Bank concessional lending.  Republic of Mozambique Interim Poverty Reduction Strategy Paper (PRSP) Incorporating the Action Plan for the Reduction of Absolute Poverty (PARPA) Maputo, February 16, 2000   - 2 - REPUBLIC OF MOZAMBIQUE Interim Poverty Reduction Strategy Paper Prepared by the Mozambican authorities' Contents Page Introduction .......6 1. Statement of the Government on its Commitnent as Regards Poverty Reduction ..6 1.1. The Commitment of the Government .6 1.2. Background .6 2. Poverty in Mozambique ..8 2.1. Profile .8 2.2. Determinants of Poverty .8 3. The Global Objective of Poverty Reduction in the Decade of 2000-2009 .0 4. Description of the Process of Preparation of the PRSP . . . 10 4.1. Additional Analysis and Development of Policies . . 10 4.1.1. Stabilization .14 4.1.2. Growth Prospects .14 4.2. Sectoral and Regional Analysis ..15 4.2.1. Analysis of the Sectoral Policies and their Compatibility .15 4.2.2. Regional Aspects .15 4.2.3. Projections of Population With or Without HIV/AIDS .16 4.3. Institutional Framework ..16 5. Dissemination and the Consultation Process ..16 5.1. Dissemination ...................................... 17 5.2. Consultations .17 6. Development of Indicators, Monitoring and Evaluation .18 7. Timeline .19 Tables 1. Selected Variables by Poverty Situation and Area of Residence ........................................9 2. General and Specific Objectives, Targets, and Programs ................................................. II References ................................................. . 21 l Translation from Portuguese into English prepared by the Mozambican authorities.  - 3 - Action Plan for the Reduction of Absolute Poverty Contents Page Preface ......................................................... . 23 Introduction .......................................................... 24 Part 1 - Poverty in Mozambique: Concepts, Background and Global Strategies . . 25 1.1. The Concept of Poverty ........................... . 26 1.2. The Poverty Situation in Mozambique .26 1.2.1. Poverty Analysis in Mozambique - Back,ground .26 1.2.2. The Survey of Households and Living Conditions (HS 96/97) .27 1.3. Action Guidelines for the Eradication of Absolute Poverty in Mozambique ..30 1.3.1. Priority Target Groups ., 30 1.3.2. Global Objective of Poverty Reduction in the Decade 2000-2010 ............ 31 Part 2 - Reduction in the Incidence of Poverty Over the Period 2000-2004: The Demographic and Macro-Economic Context ............................................................. 32 2.1. The Poverty Reduction Contect during the Period 2000-2004 . .33 2.1.1. The Demographic Context of' Poverty .33 2.1.2. The Macro-Economic Context .33 2.1.3. Estimates of the Reduction of Absolute Poverty over the Period 2000-2004 .................. , ... 34 Parti 3 - General Objectives of the Action Plan ..................................... 35 3.1. General Objectives of the Action Plan .............................................. 36 3.2. Harnonisation of the Action Plan with other Policy Instruments . .36 3.2.1. Population Policy .36 3.2.2. Food Security Strategy .37 3.2.3. National Strategic Plan to Fight STD/HIV/AIDS .38 3.2.4. The Post Beijing Action Plan ......................... 38 3.2.5. National Integrated Social Plan, Employment and Youth Programme ..... 38 3.2.6. Medium-Term Fiscal Scenario ....................................................... 39 Part 4 - Specific Objectives and Targets for the Five-Year Period ................................................ 40 4.1. Sectoral Objectives ........................................... , , , . .... 41 4.2. Specific Objectives and Targets for the Five-Year Period .43 a) Education 2000-2004 ,..... 43 1. Component: Access to Education Opportunities ............................... 43 2. Component: Reduction in Adult Illeteracy ...................................... 43 3. Component: Expansion of Technical-Vocational Education. 44  - 4 - b) Agriculture and Rural Development (2000-2003) . .................................... 44 4. Component: Increased Agricultural Productivity .............................. 44 5. Component: Rural Development ................................................. 45 c) Infrastructure ........................................ 46 6. Component: Expansion and Improvement of the Infrastructure Network .......................................... 46 7. Component: Access to Clean Water ......................................... 46 8. Component: Improved Access to and Quality of Housing ................ 46 9. Component: Access to Safe and Sustainable Energy ........................ 47 10. Component: Access to Communications ....................................... 47 d) Health ................................................ 47 11. Component: Expansion of Access and Improved Mother and Child and Under-Five Health Care ............................................... 47 12. Component: STD/AIDS (2000-2002) ............................................... 48 13. Component: Nutrition ............................................... 49 e) Employment ....... 49 14. Component: Promotion of Employment and Self Employment ....... 49 15. Component: Vocational Training ................................................ 50 f) Social Security and Assistance (2000-2003) . ............................................ 50 16. Component: Direct Social Assistance ............................................... 50 17. Component: Social Rehabilitation of Vulnerable Groups ................. 51 g) Food Security ................................................ 5 1 18. Component: Improved Household Food Security ............................. 51 h) Institutional Capacity Building on Poverty Issues (2000-2004) ... 52 19. Component: Training ................................. 52 20. Component: Research ........................ 53 4.3. Sector Matrices ........................ 54-73 Part 5 - Coordination, Implementation and Indicators .74 5.1. Implementation and Coordination Mechanisms .................................. 75 5.1.1. Partnership and Institutional Co-ordination ........................................ 75 5.1.2. Decentralisation and Participatory Development ...................................... 76 5.1.3. Inter-Sectoral Coordination ........................................ 76 5.2. Monitoring and Evaluation . , ......................................... 77 5.2.1. Type of Monitoring Indicators .......................... 77 5.2.2. Proposed Indicators .78  -5 - Tables 1. Average Consumption and Poverty Estimates by Zone and Region ................................. 27 2. Average Consumption and Estimates of Poverty and Destitution by Province ................. 28 3. Non-consumption Based Welfare Indicators ............................................................ 28 4. Annual and Five-Year Monitoring Indicators ........................................................... 79 Annexes 1. Table 5. Demographic and macroeconomic Context ..................................................... 81 2. Map 1. Incidence of Poverty by Province ...... ..................................................... 83 References ............................................................ 84  -6 - Introduction As poverty is the most important factor in the definition of any development strategy in Mozambique, the Government decided to prepare a medium/long-term development program which, with appropriate policies and measures as well as short-term instruments for its operationalization, will attack the problem of poverty, which affects around 70% of the population. In the context of its attack to poverty, Mozambique elaborated in 1999 an Action Plan for the Reduction of Absolute Poverty (Plano de Acq&o para a Reduqdo da Pobreza Absoluta- PARPA), which defines the actions and priorities to be implemented at different levels and in different sectors. PARPA was taken as the basis for the design of the Interim Poverty Reduction Strategy Paper (PRSP) and is included as an annex to this document. The present document was produced to indicate the country's current phase of preparation of the development program, what is intended to be done, the next steps, and the necessary consultation process for the production of this program. The full PRSP will be extracted from the medium-term development program. Besides this Introduction, this document encompasses seven sections: (i) the statement of the commitment of the government to reduce poverty, (ii) the presentation of the nature of poverty in Mozambique, (iii) the global objective of poverty reduction for the decade of 2000-2009, and the strategies and actions that the government sees itself using to address poverty, (iv) the description of the process of preparation of the PRSP, (v) its dissemination and the consultation process, (vi) indicators, monitoring and evaluation, and (vii) the timeline of activities to be developed. I. Statement of the Government on its Commitment as regards Poverty Reduction 1.1. The Commitment of the Government The main objective of the Government of Mozambique is poverty reduction. To this end, the Government has assumed a firm position in the anti-poverty struggle, which facilitates the definition of strategies in the fight against poverty. This aspect comes through clearly, explicitly or implicitly, in the sector policies and official documents approved by the Govemment. 1.2. Background Economic policy in recent years has concentrated on stabilization aspects, although one has now begun implementation of some policies aiming at the transition to structural adjustment. The effort was concentrated mainly on the reduction of the macro-economic imbalances. In implementing actions of this type there are implications in terms of income redistribution. The analysis of the IAF96/97 showed us that the levels of poverty are considerably elevated. For that reason, the process of growth has to rest on the directing of actions that are aimed at eliminating the levels of absolute poverty of the majority of the Mozambican population.  -7 - Having reached the current levels of development, economic stability will continue to be a critical factor for ensuring the non-deterioration of the assets of the poor, whether in the short-, medium- or long term. From 1988 to 1989 the human aspect of the stabilization program has been taken up, because it was recognized that the initial policy measures provoked adverse effects on the poorest and most vulnerable groups. It was in that sense that the Social Dimension ofAdjustment project (SDA) was instituted in 1989 with the objective of assessing the impact of the strategy and of structural adjustment in the poorest groups. In 1990 the Office for the Support to Vulnerable Population Groups (GAPVU) was established, which provides supplements to earnings of the poorest. Starting in 1990, the Policy Framework Papers (PFP) place the problem of increasing the participation of the poor in the Economic and Social Rehabilitation Program (PRES) and it was in that year that the first steps were initiated for the drawing up of a Poverty Alleviation Strategy. These actions were undertaken in a climate of political instability, since the civil war ended only in late 1992. The first attempt to define specific and explicit policies for poverty reduction in a context of peace in the country was through the preparation in 1995 of the Strategy for Poverty Reduction in Mozambique (GoM 1995a). This document defined five specific objectives: (a) improving living conditions in the rural areas, (b) investing in human capital, (c) improving the social safety nets, (d) formulating a population policy and (e) improving national capacity for analysis and monitoring of poverty. The priorities established in the Strategy for Poverty Reduction are reflected in the Five-Year Program of the Government for 1995 to 1999, where it was defined that: :"the government will concentrate its efforts as a priority ... on the reduction of the levels of absolute poverty, aiming at its eradication in the medium term, and the improvement of the lives of the people, with emphasis on education, health, rural development and employment." (GoM 1995). The estimates of poverty determined up till 1995 revealed some limitations however; in the first place, the national estimates of the poverty levels and profile of poverty were often based on extrapolations. Secondly, the objective aimed at both in the Strategy and in the Government's Program, were of an overall nature and didn't address specific actions in terms of target groups, goals, and mechanisms for coordination and collaboration of the different social actors in the fight against poverty. To address this issue, on April 13, 1999, the Council of Ministers approved the Action Guidelines for the Eradication ofAbsolute Poverty and from this came the PARPA as a means of operationalizing the Guidelines. These documents result from a detailed analysis of the data from IAF 96/97, the report Poverty and Welfare in Mozambique: First National Evaluation (MPF, 1998). The PARPA emerges as a government planning instrument which complements those that are already in use, namely: the Economic and Social Plan, the Three-Year Plan for Public Investrnents and the Annual State Budget. In parallel, the government has been developing medium-term fiscal policy which will permit the inclusion in a realistic way, with resources  - 8 - assured, of the poverty reduction actions amongst the government's annual instruments. The PARPA reflects the objectives contemplated in the different national and sectoral strategic plans, allowing a global and integrated vision of the actions to be developed for poverty reduction. Also identified are the targets that must be met in each one of the different areas, in order to allow their monitoring and evaluation in an objective way. The monitoring, evaluation, coordination, and financing mechanisms are identified in the Action Guidelines, and only the means for their materialization are yet to be established. Simultaneously, in recent years policies of a national and sectoral scope were approved which may contribute, directly or indirectly, to the achievement of the objectives of the PARPA. For example, the Population Policy should be highlighted, which answers the need to hannonize the determinants of demographic change in the population with factors of a social, economic and cultural nature, and the Food Security Strategy, which aims for the creation of conditions to ensure access to food for the whole population. Other policies have to do with more specific sectors, some of which are identified in this PARPA as immediately relevant to absolute poverty reduction, such as: education, agriculture, infrastructure, health, employment, security and social welfare, and institutional capacity for poverty issues. The PARPA is a basis for the development program. 2. Poverty in Mozambique 2.1. Profile The analysis of the data from IAF 96/97 allowed the development of a detailed profile of poverty in Mozambique. The profile assesses the magnitude of poverty and its distribution across socio-economic groups, and provides information about the poor and their heterogeneity. The profile is presented in Section 1.2.2 of the PARPA, attached. Table 1 attached to the present Interim PRSP offers a schematic summary of the incidence and profile of poverty. 2.2. Determinants of Poverty In the analysis based on the data from IAF 96 97, the following determinants of poverty in Mozambique were identified (MPF 1998): * slow economic growth up to the beginning of the nineties; v poor educational level of the members of households of economically active age, especially amongst women; * high rates of dependency in the households; * lower productivity of family farrning; * lack of opportunity for employment inside and outside of the agricultural sector; * poor development of infrastructure in the rural areas.  Table 1. Selected Variables by Poverty Situation and Area of Residence Rural Urban Mozambique Sector Variable/ Destitute Poor Non-Poor All Destitute Poor Non-Poor All Destitute Poor Non-Poor All Age Group Persons Persons Persons A. Demography Average size of household 6.1 5.5 3.3 4.6 6.2 6.0 4.7 5.4 6.1 5.6 3.6 4.8 Average rate ofdependency 60.5 58.8 47.7 55.5 61.4 57.6 47.9 53.9 60.7 58.6 47.5 55.2 B. Education Completcd primary school 9.8 11.1 17.0 13.4 25.4 28.7 58.4 41.9 12.6 14.1 25.3 18.6 (education of head or greater of household) Enrolled (7-11) M 48.2 50.1 55.9 51.5 52.7 57.9 77.6 65.6 49.1 63.0 75.2 54.5 (school attendance F 29.1 32.9 34.4 33.2 47.2 51.8 75.1 61.4 32.3 50.5 66.3 40.3 by those under 11 years of age) C. Health (use ofhealth Hadamedical appointment 56.3 56.3 59.2 57.4 64.2 69.5 81.0 74.2 57.8 58.6 63.4 60.5 services) (Vaccinations) None (5-12 months) 31.2 32.4 42.9 35.1 6.5 4.1 0.0 2.7 26.0 27.1 32.1 28.5 D. Agriculture Has a farm plot 98.7 98.9 97.6 98.5 72.8 62.5 41.3 54.4 94.0 92.2 83.4 89.5 and Land Tenure (Irrigation) Some area irrigated 2.9 2.8 2.8 2.8 6.2 5.5 1.4 4.4 3.4 3.1 2.6 3.0 (Inputs) Uses pesticides or fertilizers 1.1 1.4 1.5 1.4 1.7 3.1 6.0 4.0 1.2 1.6 2.1 1.8 E. Employment (Poverty Situation Public Administration 0.74 0.73 1.20 0.89 6.15 6.64 16.29 10.46 1.39 1.44 3.50 2.14 by Type of State/Publicly-Owned Firm 1.67 1.59 1.67 1.62 10.02 12.52 17.59 14.53 2.68 2.90 4.10 3.31 Employer) Private Sector 1.94 1.99 1.88 1.95 8.06 11.65 15.96 13.36 2.68 3.14 4.03 3.45 Self-Employed 43.2 45.19 53.10 47.81 46.48 45.54 37.04 42.17 44.14 45.23 50.64 47.07 Family Member, no Remuneration 51.56 50.23 41.67 47.40 29.93 21.44 9.75 16.81 48.66 46.78 36.80 43.39 Other 0.17 0.27 0.47 0.34 2.36 2.22 1.74 2.77 0.42 0.50 0.91 0.64 (Source: MPF 1999. The rate of dependency is the sum of household members under 16 years of age or above 59 years of age, plus those with physical or mental disabilities, divided by the total number of individuals in the household. Only for those persons who were sick. Other = cooperative sector, employer and domestic servant).  -10- 3. The Global Objective of Poverty Reduction in the Decade of 2000-2009 Mozambique's global objective is the reduction of the incidence of absolute poverty from the current level of around 70% to around 50% in the next ten years. In order to reach such reduction in the poverty incidence, the Government has the intermediate objective of reaching a level of incidence of poverty of around 60% by the year 2004. In order to confront the poverty phenomenon, the Government has been developing actions of global, sectoral, and regional nature, as well as actions towards better allocation and management of public resources. Table 2 attempts to relate the general objective with the intermediate and specific objectives, targets and the programs that the Government is using and/or intends to use to operationalize the general objectives, also as a way of logically integrating the global, sectoral, and regional strategies. These actions and the allocation of resources for their implementation will be presented in detail in the development program of which the full PRSP will be a component part. The development program will identify the specific actions to be developed, as well as the institutions to be involved, the resources to be utilized, and the implementation and monitoring mechanisms. The consultation process within the Government and with civil society will be widely utilized during the elaboration, implementation, execution and adjustment of the development program, since it will be a rolling, five-year exercise so as to absorb the dynamism of different sectors, population groups, policies and variables. 4. Description of the Process of Preparation of the PRSP This section of the document presents the additional work to be developed until the elaboration of the development program and the final PRSP which is proposed to be concluded by the end of the first quarter of the year 2001. The schematic summnary of this section is in the Timeline presented in Section 7 below. 4.1. Additional Analysis and Development of Policies In order that the development program has impact on the objective of poverty reduction, it will have to include analysis and definition of the macro-economic framework, under which stabilization occurs and sustained economic growth is projected in the medium and long term. The efficacy of the specific policies adopted for poverty reduction, and particularly reduction of absolute poverty, will necessarily depend not only on stability and economic growth, but also and perhaps fundamentally on the way that this growth particularly affects the most vulnerable population (see Timeline, Item 1).   Table 2. General and Specific Objectives, Targets, and Programs Global Objective Intermediate Obiectives Specific Objectives Targets Government Program Reduction of poverty from To keep a fast and sustainable Section 111 of PFP 1999-2000 GDP Growth 7%- 10% PRGF, the Program of the 70% to around 60% in the growth Inflation 5%-7% Government, PES, and OE year 2004 To develop human capital * Increase in access to Details in PARPA's Education SIP through investments in primary education Education, Health and Health SIP education, health, access to * Reduction of adult Infrastructure Matrices Population Policy safe water and sanitation illiteracy National Strategic Plan for * Increase in girls' access to the Fight Against education STD/H1V/AIDS * Increase in the number of Water SIP qualified professionals * Improvement in primary health care * Increase and improve the access and quality of health care for women and children * Prevention of the main endemic diseases . Improvement in the health of the youth * Prevention of HIV/AIDS infection * Improvement in nutrition * Improvement in the access to safe water and sanitation * Promotion of Family Planning  To increase agricultural * Increase in agricultural Details in PARPA's Food Security Strategy productivity in the household productivity by Agriculture & Rural PROAGRI sector encouraging the use of Development and Food Rural Action Plan improved seeds, Security Matrices Trade Policy extension services, use of Land Policy fertilizers, among others Environment Policy * Improvement in the access to land * Improvement in the access to markets * Improvement in the access to financial resources * Improvement in food security * Improvement in natural resource management * Promotion of associations of peasants and improvement in communication system * Promotion of nutritional education and healthy habits__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ To develop and improve rural * Improvement in rural Details in PARPA's Water SIP infrastructures roads Infrastructure Matrix Roads SIP | * Improvement in housing * Improvement in the access to energy services * Creation of better conditions and improvement in the situation of isolation in the rural areas  To protect the most vuinerable * Improvement in the PARPA's Social Security Food Subsidy Program groups quality of social support Matrix services * Pension system * Social rehabilitation of vulnerable groups To promote employment and * Promotion of employment PARPA's Employment Matrix Social Action, Employment self-employment in the rural areas and Youth National * Technical-professional Integrated Plan; Employment training Policy To improve the institutional * Training PARPA's Capacity Matrix Programs yet to be defined and technical capacity in * Research and monitoring poverty matters To improve the allocation of * Introduction of a MTEF; PER; Public available resources and medium-term vision in Administration Reform; PES external aid the programming of and OE. revenues and expenditures and their F operationalization w * Integration between sectoral policies and available resources To reduce regional * Facilitation of the Programs yet to be defined. asymmetries Spplication of rules and procedures, as well as legislation to promote the private sector * Promotion of decentralization and empowerment to the level of Provincial Governments (programming, resource management, and ___________________________ _________________ projects)   -14- 4.1.1. Stabilization In a brief analysis of economic policy in Mozambique in the last thirteen years, it is seen that it has been marked by the objective of stabilization, although the implementation of some policies aiming at transition to structural adjustment has already begun. The effort was concentrated mainly on the reduction of macro-economic imbalances. Economic stability will continue to be a critically important factor to ensure the non-deterioration of the assets of the poor, whether in the short-, medium or long term. 4.1.2. Growth Prospects For the final PRSP, it is intended to analyze the macro-economic aspects that will influence the putting into effect of structural changes in order to move from the phase of stabilization to that of sustainable growth. Given that poverty is of greater incidence in the rural environment, the prospects for growth should have a rural and regional focus. It is necessary to define agreed rules in the context of monetary and budget policy so as to ensure the maintenance of the low inflation levels in the economy and foreign-exchange stability, as well as an efficient management of the debt and of foreign aid, in parallel with the creation of an enabling economic environment for accelerated and sustained growth. Fighting poverty implies the directing of scarce budgetary resources to actions that contribute to sustained and comprehensive economic growth and to a better distribution of resources within the economy. In this section it is intended to develop the exercise of harmonization of resources with expenditure, in the Medium-Term Expenditure Framework (MTEF), giving emphasis to the objective of poverty reduction. The links between the final PRSP and the MTEF will be refined so as to better find the linkage of activities related to development and poverty reduction with the allocation of budgetary resources. In order to develop a macroeconomic framework with a poverty reduction focus, the Government will identify strategies and policies for sustainable and broad-based growth, so as to reach the targets proposed for the decade. This growth strategy will encompass various components, namely: (a) a set of global policies which incorporate aspects related to international trade liberalization, tax policy reform, a more efficient expenditure policy, "red tape", improvement of customs, basic infrastructure, law,. order, justice and internal security, (b) selected sectoral studies, so as to determine the necessary policies for and the growth potential of key industries, including agriculture; (c) policy studies focusing on the basic determinants for fostering prosperity; (d) development of practical macromodels to reinforce the Government's economic management capacity and its linkages with the process of poverty reduction; and (e) development of new procedures and approaches to reinforce transparency and participation, which are critical aspects for the design and implementation of effective policies for growth (see Timeline, Item 1.2). The PRSP should incorporate the results of the sectoral studies and activities to be carried out in the growth strategy referred to above. To the extent that the work agenda for the growth strategy is yet to be prepared, it is a little difficult in this phase to clearly determine the  -15- outputs. A detailed proposal should be presented for discussion in March 2000. At a minimum the PRSP will include new macro-economic projections and estimates of the interconnections between growth and poverty reduction under various scenarios. This work is important in order that in August/September 2000 the policy matrix and the macroeconomic framework are included in the review under the Poverty Reduction and Growth Facility (PRGF) arrangement for Mozambique, expected to take place in August 2000 (see Timeline, Item 1.3). 4.2 Sectoral and Regional Analysis 4.2.1. Analysis of the Sectoral Policies and their Compatibility The objective of this section is to carry out a detailed analysis of the various sector policies in place. All approved sector policies must be analyzed in greater detail. In other words, one should systematize the various existing sector policies with the goal of having a general framework for the existing hierarchies, interconnections, complementarities and contradictions. This is necessary to ensure compatibility between the sectoral policies and the growth prospects, and to define the priority sectors to reach the proposed objectives. This work will be concentrated in the first three months after the completion of the Interim PRSP, but it will continue throughout 2000 (see Timeline, Item 2.1). 4.2.2. Regional Aspects Poverty has a local dimension and actions for poverty reduction should be guided by a more integrated and regional or local approach. Data from IAF 96/97 show the differences in the poverty levels per region. Thus, the country cannot be assumed to be homogeneous and with an equal and non-differentiated approach. It is necessary to highlight that each province must have greater initiative in the definition of its strategies and targets, as well as in the process of implementation, monitoring and control. The main actions in this domain must be towards reducing regional asymmetries, proposing an appropriate level of decentralization to solve them and allowing local administration to be able to take initiative and to have a greater decision-making power regarding the actions to be taken at this level. This is an area that requires much debate and listening; thus it is proposed that this is to be done throughout 2000 and continues permanently in the future. Thus the knowledge of poverty at the local level is of extreme importance in this exercise. Simultaneously, aspects associated with inequality must deserve a special attention in policy design. The mapping of poverty, the regional imbalances, the gender imbalances and rural and urban dimension should to be set out and should always be present in the analyses. Hence provincial poverty profiles, which will allow a more disaggregated analysis of the characteristics of the poor, are being developed. At the same time, the research project with the AERC aims to assess the regional impact of various scenarios of economic growth and development (see Timeline, Item 2.2).  -16- 4.2.3. Projections of Population With or Without HIV/AIDS Mozambique is confronted with a situation of HIV/AIDS epidemic, with a prevalence rate amongst adults of around 14.5% in 1998 (MISAU 1999). In the next few years, AIDS is expected to affect the economically-active population in Mozambique and will certainly have adverse effects on the poorest and most vulnerable segments of the population. Presently it is necessary to produce projections of population with or without HIV/AIDS in order to assess the impact of the disease in the labor force, as well as the costs for curbing the epidemics (see Timeline, Item 2.3). 4.3 Institutional Framework The actions that come to be carried out in the context of poverty reduction are framed within a complex institutional context, which should be carefully studied. The multidimensional character of poverty, and the conception and implementation of policies to combat it, require the involvement of different institutions. The definition of an institutional framework to contemplate this diversity and complexity will permit the harmonization of efforts in fighting poverty as well as the development of synergies between state agencies and intermediate organizations that have links with the communities. Additional efforts will be undertaken in order to implement the measures, included in the PFP matrix regarding institutional development. Namely, the reform of the legal and judicial system, the decentralization process and strengthening of the system of law, order, and internal security (see Timeline, Item 3). 5. Dissemination and the Consultation Process Taking into account the fact that poverty is a phenomenon of multidimensional nature, the definition of the strategies for its reduction, as well as the mechanisms for the implementation of this strategy require the participation of the different social actors. Thus, since 1998 the Government has been promoting regular consultations within its institutions both at the central and regional levels, as well as with civil society and the international donor community. The design of the PARPA was the result of the joint work of several Government agencies (the Ministries of Health, Education, Labor, Social Action, Agriculture and Fisheries, Public Works and Housing, and the Social Action and Rural Development Institutes). The process of preparation of the PARPA started in early 1999, and also encompassed different areas of MPF (Ministry of Planning and Finance) both at central and provincial levels. Besides these institutions, members of the Technical Office for Population, academic and research institutions, as well as the Matola Municipality also participated in this process. The objectives of the PARPA were presented and discussed in a course on Poverty Analysis and Development Policies organized by MPF and Eduardo Mondlane University, in October 1999. Not only civil servants at the central and provincial levels, but also civil society and NGO representatives participated in this course. Finally, the most recent version of the PARPA (December 1999) was presented to provincial Governments, donors, and NGOs.  -17- During 1999, UTNDP in coordination with the government drew up a "Rapid Assessment of National Anti-Poverty Programs" (De Sousa et al. 1999) in which some recommendations were made to improve the current social security system and pro-poor policies. This work was also the object of consultations with various governmental and non-governmental institutions, financial institutions - formal and informal - responsible for the implementation of micro-credit programs, and international organizations. 5.1. Dissemination The following dissemination plan (see Timeline, Item 4) was established in order to proceed with already initiated actions for the dissemination of information, in order to reach the necessary consensus for the implementation of strategies and activities conducive to poverty reduction: * Preparation of a booklet about PARPA (objectives, concepts, priorities, targets and the role of the various stakeholders). 3 Reproduction and distribution of PARPA to the provinces, governmental institutions including members of the Parliament, NGOs, religious groups, higher education institutions, trade unions and professional associations. * Use of mass media for dissemination both through radio and television, through specific programs about poverty, with participation of the population in general. * Implementation of seminars in the provinces for governmental institutions, NGOs, religious groups, trade unions and professional associations. * Dissemination of research results as they become available. * Creation of documentation centers in each province, at the level of Provincial Directorates of Planning and Finance, with relevant literature. 5.2. Consultations The process of consultation is considered critical for the success of poverty reduction in Mozambique, encompassing both the Government and civil society. First, the consultation process will be maintained and accelerated within the governmental institutions, including the members of Parliament, in order to develop a common medium-term vision for poverty reduction, as well as to discuss how this objective will be reached, how it will be implemented, which actions to be proposed and how to monitor the evolution of poverty. Second, the process will be extended to civil society and, in particular, to producers' associations, trade unions, NGOs and religious groups among others. Presently, the Government is preparing a Strategy for the Consultation Process which is expected to be completed by end-April 2000. The objectives of this Strategy are: * To prepare an operational plan for the consultations with the key groups defined above. * To stimulate a national dialogue aimed to involve the various actors in the definition of medium- and long-term objectives for poverty reduction in the country.  -18- To involve civil society and, more specifically, the poor in order to obtain feedback to consolidate the consensus around the strategies for poverty reduction and the instruments already existing for the fight against poverty (see Timeline, Item 5). 6. Development of Indicators, Monitoring and Evaluation In order that the expected objectives be reached in the fight against absolute poverty, one will necessarily have to establish a monitoring system to regularly measure the degree of implementation as well as its impact. A set of preliminary indicators was already presented in Section 5.2.2 of the PARPA. However, this list of indicators is preliminary and can be altered as the program of development and poverty reduction for the country is being prepared and finalized. Presently, a Monitoring Strategy is being elaborated with the following objectives: * To refine the list of indicators presented in PARPA.