Mozambique - Poverty reduction strategy paper annual progress report and joint World Bank-IMF staff assessment

Documentof The World Bank FOR OFFFICIAL USE ONLY ReportNo. 26052 THE REPUBLIC OFMOZAMBIQUE Joint IDA-IMFAssessment of The PovertyReductionStrategy Paper June 5,2003 Preparedby the Staff of the InternationalDevelopmentAssociation and InternationalMonetaryFund This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization  FOROFFICIAL USEONLY THE INTERNATIONAL MONETARYFUNDAND THE INTERNATIONALDEVELOPMENTASSOCIATION MOZAMBIQUE PovertyReductionStrategy Paper-Progress Report Joint StaffAssessment Approved by Anupam Basu and Michael T. Hadjimichael (IMF) and Callisto Madavo and Gobind Nankani (IDA) June 3,2003 I.INTRODUCTION 1. The government's Action Planfor ReducingAbsolute Poverty(Portuguese acronymPARPA; the equivalentto the PRSP)for 2001-05was approved by the Council ofMinistersinApril 2001. InAugust 2001, the staffs o fthe Fundandthe World Bankassessedthe PARPA,concluding that government ownership was strong, the policy agenda was appropriate, andthe macroeconomic framework was broadly sound. For the most part, the PARPA integrated and consolidated existing sector strategies andput them ina consistent institutional andmacroeconomic framework. 2. Thejoint staff assessment of 2001expressedconcerns about the government's institutionalconstraints. It also stressed the needto improve andcontinuously update poverty surveys and assessments to measure progress and identifythe need for changes inthe PARPAstrategy, to improve social indicators, andto ensure fiscal sustainability. 3. In February2003, the governmentissueda progressreporton implementation of the PARPAcoveringthe periodfrom2001through the thirdquarter of 2002, which was prepared by the Ministryo f Finance inclose collaboration with the sectoral ministries. Duringthe productionphase o fthe report, civil society andparliamentwere not involved. This approach is not inlinewith the PARPA, which stressed the importance o fthe consultative process. Inthe period ahead, the authorities intend to use the report to resume the dialogue with stakeholders on the poverty reduction strategy. To that end, the government has established a Poverty Observatory (OP), and i s improving the integration o f the PARPA with other major planningtools (the central budget andthe expenditure plan). The OP will also facilitate the participation o f senior and technical staff whose knowledge about the PARPAis limited. 4. Measuring progresswith respectto the incomeand consumptiondimensions of poverty is hamperedby the absence of reliableandtimely data. To help address this problem, a National Household Survey i s being conducted inthe field, with the first results expected to become available toward the end o f 2003. Similarly, an Agricultural Survey, 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.  - 2 - which will shed additional light on smallholder production and incomes, should be ready in 2003. 5. While progress has been made in some sectors, the staffs are of the view that improvements are needed in a number of other areas. Inparticular, indications from the education and health sectors are consistent with a decline inpoverty levels. However, there i s a need to strengthen the participatory process, focus on pendingstructural reforms, update the medium-term macroeconomic framework, and fixther improve monitoring o f the implementation o fthe PARPA. Inthis regard, the staffs present a number o f recommendations inparagraphs 34 and 35. 11. PROGRESSOFPOVERTYREDUCTIONPOLICIESAND PROGRAMS A. Macroeconomic and FinancialManagement 6. The PARPAtargets a real GDP growth rate of 8 percent a year over the period 2001- 05, repeating the growth performance of the latter half of the 1990s. So far, this objective has been met, with real GDP growth estimated at 10percent a year, on average, in 2001-02, andprojected at 7.0 percent in2003. The highgrowth rates in2001-02 reflect a rebound from the devastating effects o f the floods in2000, particularly inthe agricultural and construction sectors, as well as the positive impact o f megaproject construction. Because o f relatively relaxed monetary conditions inlate 2000 and 2001, inflation in2001 was well above the PARPA target o f 5-7 percent. A tightening o fmonetary policy inearly 2002 facilitated a decline ininflation to 9 percent inthat year. The progress report envisages a fbrther fall to 7 percent in2003 but, more recently, the authorities have revisedtheir inflation target to 10.8 percent, takinginto account the impact o fthe recent strengthening o fthe South Africanrand, the regional drought, andhigheroil import prices. 7. The progress report focuses on the social sectors, agriculture, and governance. However, the report fails to highlight the importance of tackling decisively certain structural reforms that are critical to achieve the PARPAobjectives of sustaining growth and reducingpoverty. The pending structural agenda includes key reforms to (i) remainingvulnerabilitiesinthefinancialsystem,includingbyfurther address strengthening bank supervision andregulation; (ii) increase the efficiency o f the public sector through, inter alia, civil service reform; (iii) consolidate reforms inthe tax system andpublic expenditure management; and (iv) reduce labor market rigidities. Inaddition, the progress report does not address existingconstraints on the agricultural sector, including those associated with landtenure andtransportation. Addressing these reforms is crucial to stimulate private sector development. 8. The progress report does not include a revised medium-term macroeconomic framework on the grounds that the framework underlying the original PARPA, which contemplates rapid growth and a strong fiscal effort, remains broadly valid. The staffs feel, however, that next year's report should include an updated framework incorporatingthe  - 3 - possible effects o fweaknesses inthe financial sector on growth andthe fiscal position, and the results o fwork under way on the impact o f HIV/AIDS on government expenditure and the growthprospects. The implications for poverty o fdifferent growthrates could also be analyzed. The progress report indicates the government's intention to develop a medium- to long-term strategy for external and domestic debt, which could usefully be included inthe updated macroeconomic framework. 9. While the progressreportdoes notexplicitlydiscussthe key medium-termfiscal issuesoutlinedinthe PARPA, namely,those of reducingthe dependence on external financingandfiscalvulnerability,there hasbeenimportantprogressinthese areas. Government revenue reached 13.3 percent o f GDP in2001, well above the PARPAtarget o f 12.4 percent, and increased further to 14.2 percent in2002. At the same time, the domestic primary deficit (excludingthe cost o fbank recapitalizationoperations) has been reduced in line with the PARPA strategy. The staffs concur with the emphasis inthe progress report on implementing further reforms to strengthen revenue mobilization. 10. The progressreport evaluatesthe compositionof spendingandcompares plannedwith actualexpenditure.Preliminary data for 2002 that became available after the report was finalized indicate a rate o fbudget execution o f 95 percent, which is inline with the experience o fprevious years. 11. The PARPA envisaged that outlayson the prioritysectors' would decline from 69 percent o f total budgetary expenditures in2001 to 66 percent in2002, before rising to 75 percent by2005. The progress report shows that government spending inthe priority sectors was close to 66 percent in2001, which is less thanhadbeen contemplated inthe PARPA. Correspondingly, preliminary information indicates that the share o fpriority spending in2002 was 64.5 percent, or slightlybelow the original PARPAtarget. 12. Notwithstandingthese deviations, the staffs are on the whole satisfied that budget execution i s proceedingbroadly inline with the PARPA. Moreover, it may not be possible or desirable to increase the proportion o f the budget allocatedto priority sectors to 75 percent over the medium term because this would severely strain nonpriority-but nevertheless important-sectors. Inaddition, the PARPAtargets didnotpaysufficient attentionto the efficiency o f government outlays and the implementation capacity o f sector ministries. Ongoing public expenditure reviews would provide important additional information on these issues, andwould permit a revision o fthe original targets. B. Improvingthe Quality of, andAccess to, PrimaryEducation 13. The staffs' assessment is that progressis beingmadewith respectto the PARPA objectivesin education. The principal goal o fthe PARPAfor primaryeducation is to 1 Education, health, infrastructure (including roads, energy, water), governance (includingjustice), agriculture, and macroeconomic management.  - 4 - achieve universal first-level primary education (EP I, or grades 1to 5) by 2005 by broadening access to schools and improving the quality o f services, as well as by increasing female enrollment. 14. The progress report indicates that, although school construction i s runningfar behind its targets, other key measures are on track, including increases inpublic expenditure, improvements inteacher training, increased textbook availability, and curriculum revision. The effectsof these measureson key PARPAindicatorshavebeenpositive.The number o f EP Istudents increasedby 5 percent in2002, with the gross enrollment rate rising from 70 percent in 1998 to 104percent in2002. At the same time, girls represented 44 percent o f enrollment in2000, meetingthe PARPA target. The primaryschool system i s also becoming more efficient. A recent analysis indicates that the cohort survival rate for the last year o f EP1increased significantly, reflecting a reduction indropout andrepetition rates. 15. Despitethese advances,the efficiency of the educationsysteminMozambiqueis stilllow. Inparticular, more aggressive action isneededto improve the quality o fteaching, especially inthe rural areas, where more than halfthe teachers are untrained. Also, progress inthe next levelofeducation(EP11,or grades 6-7) hasbeensignificantly slower thanin EP I, the EP I1gross enrollment rate remainingbelow 30 percent. The discussion inthe with progress report appears to focus mostly on curriculum change andtraining, but it could have also analyzed the socioeconomic and sector-specific factors that underlie the low completion rates, as well as remedial policies inthis area (e.g., rationalizing teacher allocation by merging lower andupperprimary school systems). 16. With assistancefrom donors andthe World Bank, the authorities are conducting a public expenditurereview that will provide further insights into the effectiveness o fsocial spending, including inthe education sector. C. Expandingthe Coverageand QualityofHealthCare 17. Overall,the staffs' assessmentis that the PARPAplansinprimaryhealthcare are largely beingfollowedand are havinga measurableimpacton relatedsocial indicators.The 2001 PARPAincorporates the government's Strategic Planfor Health, emphasizing the need to broaden access to primaryhealth care and improve its effectiveness, especially for rural areas andvulnerable groups, andto combat transmissible diseases (malaria, tuberculosis, leprosy, andHIV/AIDS), which are the main causes o f mortality and morbidity. 18. The principal actions highlighted bythe PARPA include improving sector planning andmanagement; rehabilitating infrastructure; trainingbasic health caregivers; andensuring that all healthcenters are well equipped. The progress report does not explicitly indicate whether all these actions have been implemented, although the available evidence shows a significant improvement inhealth care andrelated indicators, particularly with respect to attended births,maternal and infant mortality, and vaccination coverage.  - 5 - 19. The improvementsinthese indicators,however,havefallen short of those anticipatedinthe 1990s. This ispartly explainedbythe impact o fHIV/AIDS, but also by shortcomings inexpanding coverage. Inthis connection, the distances to be traveled to health posts continue to be a problem, andthe user fees charged for health services are frequently higherthanthose set officially. 20. The progressreportwould also havebenefitedfrom a morethoroughdiscussion of the reasons for the weak response of healthoutcomes to the inputs. Inparticular, there i s no discussion o f user fee arrangements or o f a beneficiary assessment carried out in2001. Looking ahead, the public expenditure review under way includes an innovative expenditure- tracking exercise inthe health sector that would contribute to identifyingareas for efficiency gains. 21. The 2001 PARPA incorporatedthe National Strategic Planto Combat Sexually Transmitted Diseases and HIV/AIDS approved inOctober 1999, which intends to slow the spread o fthe infection andmitigate its effects through prevention, support, and care activities. The staffs assessment is that satisfactory progress i s being made inresponding to HN/AIDS. Education andinformation campaigns on the HIV/AIDsepidemic havebeen carried out; 24 Voluntary Testingand Counseling Offices were opened in2001 andthe first halfo f 2002; andit is envisaged that 50 offices would be fully operational by 2007. In addition, the PARPA's target o f 24,000 tests for 2002 was exceeded. D. EncouragingAgriculturalGrowthandRuralDevelopment 22. The PARPA's strategy for agriculture andruraldevelopmentemphasizedthe needto transformpublicinstitutionsto supportan expansionof outputthroughthe provisionof essentialservices, includinginfrastructure,education, health,andfinancial services. The progress report focuses onrecent productiongains insome key crops as indicators o fprogress, but it is not clear the extent to which policy improvements or better services to farmers explain these gains. To varyingdegrees, some sharp increases in production appear to reflect a recovery from the 2000 floods. 23. The section on agricultureinthe progress reportlacksdata on implementation andoutcomes, and does notadequatelyassess implementationof the PARPAprogram for the sector. To a large extent, this reflectsthe focus o fthe Ministry o fAgriculture on PROAGRI,the IntegratedProgram for Agricultural Development, which is less comprehensive than the PARPA andputs less emphasis on intersectoral linkages. PROAGRI focuses on rationalizing the Ministry o fAgriculture, decentralizing functions, and strengthening extension services. There i s a need to fully incorporate the Ministry o f Agriculture into the monitoring process o f the PARPA, which would permit a closer integration o fthe PARPA with PROAGRI. 24. Asidefrom the shortcomingsreferredto above, externalfinancingof PROAGRI hasenabledthe Ministryof Agricultureto substantiallyincreaseitsoperational capacity.There has also beenprogress on decentralization, as provincial directorates are  - 6 - allocated their own budgets, do their own procurement, anddistribute funds to the districts. The districts, inturn, are now allowed to prepare their budgets andto procure equipment and supplies. Inall, however, this has not yet translated into major improvements inthe availability or quality o f the services provided to farmers. Moreover, despite efforts to expandandmodernize extension services, effectiveness andcoverage remainlimited. 25. Roadmaintenanceis essentialfor an efficientand effectivetransportationof agriculturalinputsandoutputs.Inthe first halfo f2002, the government's road maintenance program was runningwell behindschedule, partlybecause o f the diversion o f resources to repair flood damaged roads. The more systemic problem, however, is that the roadmaintenance program is not yet based on periodic surveys for estimating costs, setting priorities, and scheduling maintenance. E. StrengtheningGovernance,Legality,andJustice 26. The 2001PARPA stressedthe needfor good governanceas a conditionfor povertyreduction. Significantprogressis beingmadeinimplementingthe key componentsof the program,which involve decentralizingpolitical and administrative functions, increasingthe efficiency andtransparency o f the legal system, fighting corruption, andstrengthening the public finances. 27. The structureofthe governmentis beingreviewedandreorganizedwith the guidance and support o fthe Inter-Ministerial Commission for Reform o f the Public Sector (CIRESP) and its Technical Unit (RESP) and all ministries are expected to complete a mapping o f their structures and an analysis o f their h c t i o n s by end-2003. Moreover, specific restructuringplans are being developed for each ministry, with the Ministries o f Education, Health, andAgriculture expected to initiate the restructuring process inthe second halfo f 2003. 28. Inaddition, acooperative effort isunderwaywiththesupportofseveralinternational agencies to implement a nationalprogram for the decentralizationof planningandfinance. Inthis connection, planshavealready beendevelopedto begin decentralizationinsix provinces. The main goals are to recognize the legitimacy o f local consultative councils, provide the basis for reorganization o f district governments, and formalize the role o f districts inthe national planning system. Looking ahead, there is a need to clarify the rules for allocating resources to subnational governments, proceed carefully with the transfer o f these resources inorder to prevent a loss o f control bythe central government, and ensure adequate financial, administrative, and reporting capacity is established at the subnational levels. 29. The measures included inthe 2001 PARPA inthe areas o f legality,justice and publicorder are designedto raise the capacity, efficiency, andtransparency o fthe legal system and increase its ability to respond to the needs ofthe private sector. The Ministryo f Justice, the Administrative Court, the Supreme Court, andthe Attorney General's Office have finalized an overall strategic plan and detailed operationalplans, whose implementation  - 7 - is expected to start in2003 andwould be completedby 2006. Measures will include, inter alia, the decentralization o f the justice system by establishing courts inrural areas and intermediate level appeal courts to reduce the burdenon the Supreme Court. Significant challenges remain, andthe process o f modernizing legislation is likelyto take longer thanthe four years envisaged inthe strategic plan, particularly because o fthe needto develop a suitably trained cadre o f legal andjudicial personnel. 30. While importantchallenges remain,the authoritiesare makingprogresstoward achievingthe PARPAobjectivesin fightingcorruption. An anticorruptionstrategy approvedinOctober 2001 will be revised, based on the findings of a survey o fpublic perceptions to be carried out with donor funding, andan anticorruption law beingprepared byparliamentarians, which contains reforms to the penal code, is expected to bepassedin 2003. Inaddition, the Ministryo f Justice has established an anticorruptionunit to investigate reports o f corruption andproceed with prosecutionwhen warranted. 31. The publicfinancemanagementsystemis being modernized to increase transparency and improve budgetary control and decentralization. The first step inthis process was the passageo fthe public finance management law in2001 and its corresponding regulations in2002. The reform process envisages the introduction o f (i) adequate rules and procedures for programming, budgeting, and controlling public resources, (ii)system for a providing timely andreliable information on budgetaryperformance, (iii) improved procedures for budgetary accounting, and (iv) internationally acceptable internal auditing rules. The implementation of these reforms andthe establishment o f an integrated financial management system (SISTAFE) is being supported by donors. The new system will be introducedintwo ministries during2003 andinthe remaining ministries in2004. A new classification system for expenditures was used inthe 2002 budget to improve analysis, and budget coverage has been extended with increased, though still incomplete, reporting o f ministerial own funds and donor-funded expenditures. These advances have revealedthe need to develop provincial, sectoral, and overall capacity inanalyzing expenditure data and linkingexpenditures with outcomes. 111. MONITORING,EVALUATION, AND DISSEMINATION THE PARPA OF 32. The overall responsibility for implementing and monitoring the PARPAhas rested, so far, with the Ministry o fFinance andPlanning.Currently, the PAFWAisbeing integrated into the national planning system inorder to ensure consistency. The Plan0Econ6mico e Social (PES, Social andEconomic Plan) andthe Orpmento do Estado (OE, the budget) together generate a set o f objectives, actions, and programs that permit an annual review o f PARPA implementation. Monitoringisbasedon information provided bythe PES andthe Relatorios de ExecuqBo (budget execution reports). Moreover, an overall expenditure management review was conducted in2001,and the analysis o f five major ministries i s under way, with assistance from donors and the World Bank. 33. The monitoringof the PARPAhasbeenfacilitatedbythe preparation,for the first time in 2002, of a detailedmatrix of PARPA activitiesby sector, andby a  - 8 - comparisonof objectives,targets, and outcomes during2001 andthe first halfof 2002. The preparation o f the matrix has revealedthe needto systematize information about the PARPApriorities, and to monitor a limitednumber o fconcrete sectoral performance indicators. Monitoring is constrained, however, by the quantity and quality o f data furnished by sectoral agencies (e.g., the lack o f survey data on agricultural production ando f expenditure data on major healthprograms, such as the Malaria Control and Tuberculosis Control). For fiture progress reports, it would be usefulto consider the Millennium Development Goals (MDGs), inconjunction with the PARPA targets, for monitoring purposes. 34. The involvementof domestic andforeignpartnerswill betaken into account in the planningprocess. The donor community has moved strongly insupport o fthe PARPA process and is working with the government on aligningthe various institutions' budget support programs to the PARPA objectives. Moreover, a broader consultative forum for dissemination and discussion o fthe PARPA objectives and accomplishments i s being provided through the OP, which held its first full meeting inApril 2003, with the participation o f government managers inkey PARPA areas andrepresentatives o fthe civil society and international partners. The staffs welcome these developments. 35. Basedon emerginglessons, the progressreportcontainsa numberof important recommendationson implementationandmonitoring.The staffsare in broad agreementwith these recommendations,whichthe authoritiesintendto implement during2003: Ensurethat the budget executionreports andthe PES have matrices o f programs and strategies reflecting the PARPApriorities to facilitate implementation and monitoring. 0 Regionalize projects and programs andresource allocations to reflect the government's decentralization objectives. Strengthen knowledge among sector staff responsible for planning, implementing, andmonitoring the PARPA, andhave sector unitsprepare an evaluation o fPARPA- related activities for submission to the Ministry o f Finance andPlanning; and * Reduce the number of actions inthe PARPA, with the objective o f eliminating low- priority activities to improve its focus andfacilitate implementation and monitoring. Regarding the government's decentralization objectives, the staffs would caution the authorities against moving forward at a fast pace without ensuring that an adequate administrative and financial capacity i s inplace at the subnational level. In addition,the staffswould urgethe authoritiesto focus on the followingover the nextyear:  - 9 - e Support the activities o f the Poverty Observatory by establishing an intersectoralhterministerial working group headed by the Ministryo f Finance and Planning to monitor and evaluate progress inPAFWA implementation. e Updatethe macroeconomic framework for next year's progress report on the PARPA. This would involve incorporatingthe results o fwork under way on the impact o f HIV/AIDS on public expenditure and analyzing the implications o f different growth rates for poverty. e Inreducingthe numberofactions, update the PARPApolicymatrix andincludethis insubsequent annualprogressreports. Also, consider usingthe MDGsinconjunction with the PARPAtargets for monitoringpurposes. e Strengthen the participatory policy dialogue and the way this dialogue i s reflected in the next progress report, including by citing the policy adjustments made inresponse to past outcomes. Inthe area o f education, for example, examine further the reasons behind the poor outcomes interms o f completion rates andidentify specific actions to addressthis problem. e Ensure that the management team o fthe Ministry ofAgriculture focuses on the PARPAand improves intraministerial information flows. e Accelerate efforts to complete the National Household Survey, which will provide comprehensive data for a hller assessment o f the impact o f the recent rapid growth on poverty. e Improve the statistical basis for economic and social planningand strengthen the monitoring o f the PAFWA. 36. The staffs believe that these recommendations are realistic and achievable. Moreover, sufficient technical assistance i s already being provided to ensure their smooth implementation.2 In addition,the staffswould recommendthat the followingsteps be taken over the comingyears: e Address the pending structuralreforms, inparticular those relatingto vulnerabilities inthe financial sector. e Use the annual progress reports to inform domestic stakeholders and buildsupport for the government's poverty reduction strategy. Inthis regard, better planning o fthe Several donors, as well as the Fundand World Bank, are supporting the government's efforts to strengthen statistical information. The government i s also developing an action plan inthis area, drawing uponthe data module of a Report on the Observance o f Standards and Codes conducted in2002. With respect to HIV/AIDS, the World Bank is completing a studyon its impact on economic growth.  - 10- consultationprocess is warranted, as well as greater involvement o fparliamentarians and local governments. 0 Improvepoverty analysis, including gender and vulnerability issues. Inparticular, elaborate on the risks o f natural disasters and food insecurity; analyze the contribution o f the megaprojects and o fbroad-based sources o f growth (ie., agriculture) to poverty reduction; and examine the key constraints to private investment. 37. Preparationof the progressreporthasbeen avaluablelearningexperiencethat hasprovidedcandidinsightsintothe difficultiesinvolvedinthe implementationand monitoringof the PARPA.Ithas revealedthat implementation didnot sufficiently focus on the highest priorities, that sector management and information flows should be strengthened, and that the lack o f data makes it difficult to quantify progress toward poverty reduction goals. Ithas also provided a view o fthe pace o f implementation. Inthis regard, the health andeducationprograms aremoving ahead andproducingpositiveresults, andprogress is being made instrengthening institutions and governance. Agriculture, however, appears to be the weakest link. Ownership o f the PARPAremains strong. The priority now is to address these issues and ensure that the PARPA strategy incorporates the lessons that have been learned. 38. The staffsofthe WorldBank andthe IMFconsiderthat Mozambique's efforts to implementthe PARPA strategyare sufficientevidence of itscommitmentto poverty reduction,andthat the strategy continues to provide a crediblepoverty reduction framework anda sound basis for World Bank andFundconcessional assistance. The staffs recommend that the ExecutiveBoards o f the World Bank andthe IMF arrive at the same conclusion.  Republicof Mozambique MINISTRY OF PLANNING AND FINANCE PARPA IMPLEMENTATI0N EVALUATION REPORT 2001 1st half 2002 (Sectoral performance) 3rd quarter 2002 (Public expenditure) MAPUTO, FEBRUARY 2003   - 2 - TABLE OF CONTENTS INTRODUCTION ........................................................................................................... 3 I-THENATIONALMACROECONOMICSETTING ............................................ 3 I1-INTEGRATIONOF GOVERNMENTPLANNING,MONITORINGAND EVALUATIONINSTRUMENTS ................................................................................. 5 I1 1 Issues relatingto the Economic andSocial Plan(ESP) 5 I1 2 Issues relatingto the Statebudget (SB) 6 I1 3.Monitoringandevaluation ... . . ..................................................................... ............................................... ....................................................................................... 6 I11-EVALUATIONOF PARPA IMPLEMENTATION .......................................... 7 I11. 1Sectoralperformance inthe fundamental actionareas (1995-2000) (a) Education sector . ............................. 7 ................................ ................................... @) Health sector .................................................................... (e) Agriculture and rural development.................. ................................... (d) Infrastructure.................................................... ................................... (e) Goodgovernance.legali& andjustice. decentralization and deconcentration... 111.2. Evaluationo fexpenditure inFundamental Action Areas - 1999-2002 ...................... 30 (a) Total expenditure........................................................................................................... 31 34 (e) InvestmentExpenditure.............................................. @) Current expenditure..................................................................................................... (d) Execution ofcurrent and investment SBfor January-September2002......................... 36 flConclusions........................................................... (e) Geographicdistribution of expenditure......................................................................... 36 ................................................. 43 GENERALCONCLUSIONSAND RECOMMENDATIONS ................................. 1.Improvement ofthe budget andplanningsystem.......................................................... 43 44 2 Monitoringandevaluation procedures . ......................................................................... 3.Achievement ofphysical andfinancial targets andother programmed actions ................ 45 44   - 3 - INTRODUCTION Reducing absolute poverty inMozambique has been a key government objective ever since the f i s t days o f independence. Following on from the Action Guidelines for the Eradication o f Absolute Poverty (1999) andthe Action Plan for the Reduction o f Absolute Poverty (PARPA) 2000-2004, in April 2001 the government adopted the 2001-2005 version o f PARPA, whose ongoing results and level of executionare analyzedinthis evaluation report. Conceived as a rolling and dynamic medium-term intersectoral planning instrument, PARPA i s integrated into the normal planning and implementation cycles as an expression o f priorities in the fight against poverty established inthe 2000-2004 Government Program. It is materialized through the annual Economic andSocial Plan(ESP) andthe State Budget (SB). A monitoring and evaluation strategy was devised to accompany and oversee PARPA implementation, using mechanisms that exploit existing instruments, such as the ESP Balance Sheet and SB Execution Reports. Nonetheless, the current phase of monitoring and evaluation requires supplementary analytical data to be produced, to afford a more in-depth view o f the implementation o f government plans andprograms-hence this supplementary document, which is basedoncurrently available information. The document is structured as follows: section Ipresents the national macroeconomic setting and describes the main economic policy measures for 2001 and 2002; section I1evaluates the process of integrating PARPA into annual planning instruments and the monitoring and evaluation process. Section 111,divided into two parts, focuses on PARPA implementation: subsection 111.1 considers the government's performance inthe fundamental action areas, namely Education, Health, Agriculture, Infrastructure and Good Governance. Afier describing the trends o f the main sectoral indicators, it compares the results obtained by these sectors inrelation to the corresponding PARPA targets, and describes the key activities carried out. The conclusions o f this evaluation suggest lines o f action to improve sectoral performance. Subsection 111.2 evaluates the use o f public resources in the fundamental action areas, comparing data on annual planning and budgetary execution with the corresponding PARPA commitments. The final part of the document contains the main conclusions oneacho fthe issuesdiscussed, ending witha set of recommendations for PARPA review. I-THENATIONALMACROECONOMICFRAMEWORK Despite devastation from flooding in the central and northern regions, the Mozambican economy performed well in 2001, posting a GDP growth rate o f 13.9percent, falling average inflation (9.1 percent compared to the previous year's 12.7percent), andexport growth ina context o f import restraint. Following the previous year's pattern, in 2001 there was another major inflow o f funds in connection with the external debt relief program, and also as a result o f international partners' response to the government's appeal for emergency reconstruction assistance following the floods (Donors Conference, Maputo, 2001). It was these efforts to replace destroyed infrastructure, together 'Thisdocument was producedusingthe following main sources: ESP and SB balance sheets for 2001 and 2002; dataon the execution o factions contained inthe PARF'A 2000-2004 and 2001-2005 operational matrices; data from INEandvarious ministries; and consultations with sectorsdirectly responsible for implementing activities inthe fundamental action areas.  - 4 - withthe recovery of agricultural production, that made it possible to relaunchthe economy in2001- 2002. A growth rate o f around 7 percent i s forecast for 2003. Table 1:Macroeconomicindicators-2000-2003 (Percentages) The govemment also persisted with its efforts to maintain macroeconomic balance in 2001, by controlling public expenditure and persevering with realistic fiscal, monetary and exchange-rate policies. This boosted public revenues in 2001 (13.3 percent o f GDP compared to PARPA goal o f 12.4 percent) andm o w e dthe fiscal deficit inline with the government's announced target. A broad set of regulatory anddisciplinary measures were adopted or took effect duringthe reporting period, including the following: entry into force o f the Fiscal Benefits Code; creation and implementation o f new Special Tax Offices; strengthening o f tax inspections and audits; consolidation o f VAT; and implementation o f the State Financial Management Act (Law 9/2002), which was passed by the Assembly o f the Republic in 2001. The latter increases transparency requirements inbudgetary actions, and strengthensthe principle o f program budgeting inthe priority sectors. Inthe monetary andexchange-ratedomain, measuresare beingadoptedthat aimto combine the goals o f economic growth with low inflation, while maintaining sufficient internationalreserves to finance five consecutive months' imports o f goods and services. Measures include: active monitoring o f commercial bank liquidity; computerization o f data exchange in the interbank money market; introduction o f consolidated supervision o f financial institutions, and an expansion o f the Treasury billmarket. The measuresindicatedabove, along with others already implemented and/or inpreparation (e.g. the practice o f reporting quarterly budgetary execution; and issuingTreasury bills for sale to the public, to mop up surplus liquidity inthe national economy (Ml) andprevent and/or ease future inflationary pressures), together with reductions indebt service stemming from the relief provided by the HIPC initiative, are, and will continue to be decisive elements in the government's poverty reduction strategy, as embodied inPARPA. Also aimed inthe same direction are ongoing studies to create a tax authority, together with preparation (2001) and implementation (as from January 2002) o f the new organic, economic and functional classifiers for State expenditure and financial operations. The new breakdown will facilitate more detailed analysis-even down to the sectoral andintra-sectoral level- o fthe utilizationo f resources distributed by the various government agencies.  - 5 - The Government o f Mozambique, acting through the Ministry o f Planning and Finance (MPF) and the Bank o f Mozambique, has begunpreparations for a fast-executing post-HIPC debt strategy; and a domestic public debt strategy i s also currentlybeing developed. I1-INTEGRATION OF GOVERNMENTPLANNING,MONITORING AND EVALUATIONINSTRUMENTS PARPA was conceived as an instrument within the public planning system that makes the govemment's five-year program operational. Its implementation involves annual planning o f its proposals, objectives and actions inthe Economic and Social Plan (ESP) andthe State Budget (SB). Consistent with these proposals, monitoring and evaluation mechanisms prioritizeand make the most o fexisting instruments linked to the ESP Balance Sheet andSB Execution Reports. The conceptual framework described above requires adjustments to be made to current planning practices (including monitoringand evaluation). This section reviews efforts made inthat direction, highlightingthe constraints encountered. The corresponding conclusions and recommendations are set forth inthe final section o fthe document. 11.1. Issues relatingto the Economic and Social Plan (ESP) Annual planningneeds to adhere more strictly to the proposals set out inthe government's five-year program and medium-term planning instruments, in order to contribute to their implementation. Medium-term instruments include: PARPA 2001-2005; strategic sectoral and provincial plans; and the Medium-Term Fiscal Scenario. It is therefore important for each year's ESP to establish explicit objectives, actions and targets for that year, consistent with the effective implementation of PARPA and other medium-term instruments. Such instruments must unequivocally become foundation documents for the annualplanningprocess. Accordingly, in 2001 the methodology used to prepare the 2002 ESP named PARPA as its basic planninginstrument. An evaluation ofthe current state of integrationandconsistency shows the following: The 2001 ESP did not explicitly achieve the required level o f consistency between actions to be undertaken and PARPA proposals. This was partly due to the length o f time taken inreviewing the final approvedversion andits publication, which draggedonuntilSeptember2001, by whichtime the 2002 planning cycle had already begun. In the 2003 cycle, which has just started, intersectoral discussions are now being based on PARPA and other medium-term instruments, so integration and consistency are likely be greater andmore explicit. Planning proposals at the centralandprovincial levels remain out o f step with each other. Activities at the provincial level, reflected in the provincial ESP, are not explicitly consistent with PARPA and strategic sectoral plans. A major effort needs to be made to regionalize (by provinces) the targets adopted at the sectoral level, to ensure they are considered inthe provincial planningprocess. This is important for the decentralization o f resource allocation, and for the implementation o f plans, oversight and evaluation. The sectors needto take the initiative onthis, andit is thejob o fthe MPF to promote andmonitor the process. Actions taken by MPF inthis direction thus far were included inthe 2003 planningcycle: the document Orientapjespara a prepara@o do PES e do OE ("Guidelines for preparing the ESP and SB") made it compulsory to explicitly establish the targets andresourcesto be assigned to the provinces, in the light o f priorities defined in the government's program and in PARPA. Teams sent by MPF to assist the provinces inpreparing their budgets informed provincial  - 6 - offices o f the need to integrate PARPA with other planninginstruments. Inaddition, discussions on SB proposals analyzed the regional distribution of programs budgeted by sectors inthe fundamental action areas that already have integratedprograms inplace: namely education; health; agriculture and ruraldevelopment; andpublic works (highways andwater). 11.2. Issues relatingto the State budget (SB) Inview ofthe fungibilityofresources,andinorder to matchthe increaseinfundingallocatedto (and within) priority sectors to actions conducive to poverty reduction goals, by promoting social and economic development following a wide range o fpreceding initiatives, it was decidedto break public expenditure classifiers down into more detailed subclasses. This meant that the SB 2001 execution reports were prepared on the basis o f a transitional classifiers, but the 2002 SB was preparedand i s being executed andmonitored usingthe new more detailed ones. Since this i s the first year in which the new budgetary classifiers have been used, the learning curve i s still in play. Accordingly, analytical capacities need to be to developed at the provincial? sectoral and global levels, to enable early corrective measures to be taken to ensure timely implementation o f the programs, actions and targets established in annual and medium-term planning processes. In addition, the data series that will be produced are expected to serve as an important additional tool of evaluation and decision- makingregardingthe consistency ofobjectives, actions andresource allocation. Inaddition to these measures, worries about the effectiveness of public expenditure has led the government to embark on what will become a systematic public expenditure review (PER), supported bythe World Bank.This processhas already startedinthe education, healthandagriculture sectors. 11.3. Monitoringand evaluation Following the adoption o f PARPA 2001-2005, deepening, clarification and decision-making on the final monitoring and evaluation scheme became a government priority. The fundamental principles underlying this scheme were debated and discussedindetail, leading to final adoption o f the specific monitoring andevaluation document inDecember 2001. In the same way as PARPA is integrated into the existing public planning system, the issue of PARPA monitoring and evaluation was resolved by integrating it into the existing public planning system. Monitoring (of processes inparticular) is based on an information system consisting o f ESP Balance Sheets and SB Execution Reports. For these instruments inparticular, valuation andbalance sheet processes have beenintroducedinthe various organizations, including provincial governments, ministries, the Council o f Ministers, and Parliament. The impact monitoring system has also now been defined. This includes quantitative and qualitative poverty assessments, the preparation o f which i s open to academic institutions, and to other participants that wish to apply from outside the public sector. A feature o fthe existingplanningprocesshasbeenthe participationo flocalandforeign partners; and their consultation work in sectoral, provincial and participatory district planning is well h o w n and appreciated. Nonetheless, given the non-existence of a more global and wide-ranging forum at the central level, the Poverty Obsewatory (PO)was created. This is a consultative forum whose primary function i s to monitor PARPA objectives, targets and actions. Although coordinated by the government, it is responsible for establishing solid foundations for coordinated action by all participants inthe fight against poverty andpromotiono f sustainable development inMozambique. In 'In this context, DNPO staff traveledto the provinces inJuly-August 2001 to train personnel inthe provincial directorates for Planningand Finance, Education, Health, Agriculture and Public Works, to usethe new classifiers inbudgetary programming.  - 7 - fulfillingthis brief, it works throughthe monitoring andevaluationsystemfor mediumandshort-term planning instruments, among other things. It also recommends measures aimed at the continuous improvement o fpublic policies. Operational implementationo f the PO consists o f three different phases: conception and preparation o fthe proposal; its approval by the government andother participants; andthe holdingo f six-monthly evaluationmeetings (the first scheduledfor the fourth quarter o f 2002) to analyze monitoring reports and assess compliance with the poverty reduction strategy established in government planning instruments andinother documents submitted by partners inthe Opinion Council. The latter i s a top- level meeting o f the PO involving State-sector leaders representing PARPA fundamental areas, together with representatives o f civil society organizations (CSOs) and Mozambique's international cooperation partners. The PARPA monitoring strategy was finally introduced on a routine basis following its implementation in 2002. With regard to Process and Results Monitoring, PARPA matrices were completed for the first time to measure sectoral performance during 2001 and the first half o f 2002, andthey accompaniedthe respective ESP balance sheets (information which servesas abasis for this report). Inthe impact monitoring domain, the results o fthe most recent 2000-2001 QUIBB survey are currently being analyzed, in a process consisting o f data modeling and verification o f preliminary results. Inthe case o f Budget Monitoring, public expenditure is being evaluated in the education, health, andagriculture andruraldevelopment sectors. Work done on process andresults monitoring was subject to a number o f constraints, relating mainly to the quantity andquality o f information provided by the sectors as to their compliance withpriority actions. Inmany cases this information was substandard, andin some cases totally lacking. In other cases, the information received revealed a lack o f understanding o f the real dimension o f existing problems and the most suitable corrective measures. Insome instances where programmed actions failed to be carried out, it was merely reported that the execution o f a given action was hindered or rendered unviable because o f a lack o f financial or humanresources, without clearly andobjectively quantifying and specifyingreal factor needs. The same criticism applies to "successful cases", when reports omit to make a qualitative assessment o f the results and effects produced by the actions im~lemented.~ To solve this problem, work has been going on to raise participants' awareness o f the need to systemize the process o f collecting and reporting information on priority PARPA activities. Sectors were specifically recommended to include indicators in their monitoring systems, and they are requiredto regularly submit completed matrices attachedto the sectoral ESP. I11-EVALUATIONOF PARPA IMPLEMENTATION 111.1Sectoral performance inthe fundamental action areas (1995-2000) This section evaluates progress made incomplying with PARPA 2001-05 objectives inthe priority sectors. Progresshas mainlyinvolvedexpanding coverage andenhancing the provision o fbasic social services, andpromoting the supply o f food andcashcrops, where producers inthe ``rural households" sector are major players. The analysis will evaluate the trend o f indicators projected for the sector, 'For example, courses andother trainingprogramswhere the number oftrainees i s mentionedwithout providingevaluative data.  - 8 - measuring the level o f execution of programmed activities. Any inferences drawn should ultimately be usedto improve PARPA. (a) Education sector PARPA has the following basic objectives in this fundamental action area: (a) universal school enrolment andexpansion o f access to all levels of schooling, with special emphasis on gender equity; (b) improvement of the quality and relevance of schooling, in order to reduce the inefficiency indicatedby student repetitionanddropout rates. To evaluate the performance o f this sector, an analysis was made o f the trend o f selected indicators, usingatime series covering 1995-2002. Datafor 2001 and2002 are compared with the corresponding PARPA targets. This exercise i s intended to evaluate the extent to which measures adopted in the sector, andincludedinthe Strategic Plan for Education (PEE), are achievingthe desired results. To assess improvement in access to education, specifically progress towards universal primary enrolment, the gross intake andenrolment rates were analyzed. The gross intake rate at EP1 level (Primary Grades 1-5) rose from 66.8 percent in 1995, to 122.3percent in 2001. The corresponding PARPA targets for 2001 and 2002 were 120 and 122percent, respectively, so the 2001 target was 113 percent fulfilled. The intake rate inthe first half o f2002 was 118 percent, however. At the EP2 level (Primary Grades 6-7), while the gross intake rate remains below 40 percent, it has risen from around 11.5 percent in 1995 to 25.6 percent in 2001, exceeding PARPA expectations by 2 percentagepoints. Moreover, preliminary estimates for 2002 see EP2 intake rising to around 31.3 percent-6 percentage points above target, so compliance with the corresponding targets for 2001.and2002 can be considered satisfactory. [;I;- Figure 1 Trend of gross intake rates 1401 / " 1995 1996 1997 1998 1999 2000 2001 2002 10GrossintakerateinEPI .Gross intakerateinEP2I Note: Figures for 2002 are estimates. Source: MINED-National Planning Office, 2002. The basic difference inthe performance o f the intake indicator between EPl and EP2 stems fromthe fact that some children enter the school system at the EP1 levelolder the normal age, andthere i s also a highrepetition rate. Another part o f the problem is generated on the supply side at the EP2 level.  - 9 - The number o f schools offering complete primary education (EP1 andEP2) has grown, but where this has not happened, students have to travel further to obtain EP2schooling, and this acts as a disincentive to persevering withtheir studies. Gross enrolment rates show a rising trend at the EP1 level. This statistic i s defined as the ratio between the total number o f students enrolled inEP1 andthe population inthe official age group for that level (i.e. children inthe 7-1 1age range from 1987until 1992, andinthe 6-10 age group as from 1993). Froma level o f 56.9 percent in 1995, the gross EP1 enrolment rate hadclimbedto 99.5 percent by 2001, in line with PARPA targets (loopercent). In 2002 the rate is expected to reach 104.1 percent, 2 percentage points above the target established in the operational matrix. Gross enrolment rates in EP2 were around 27.9 percent in2001, broadly coinciding with the forecast made inthe PovertyReductionPlan(28 percent). The PARPAtarget for EP2 gross enrolment is 30percent for 2002, andthe forecast for the year is 31.2percent; this means a compliance rate o f 101.2 percent, and a 3.3 percent improvement compared to 2001. Provided this pattern of performance is maintained, PARPA target for 2005 (36 percent) looks set to be attained. Figure 2 Trend of gross enrolment rates Note: Figures for 2002 are estimates. Source: MINED-National PlanningOffice, 2002. The analysis o f intake andenrolment indicators points to a positive trend inaccess to education inthe primary school subsystem. This is basically the outcome of efforts being made within the education sector, such as additional school building and initial teacher training. Results achieved in2001 and the first halfof 2002 include the following: 0 A total of 424 new schools were opened in 2001 (an additional 6 percent over the total number o f schools in 2000), distributedmainly in the provinces o f Zambtzia, Niassa and Inhambane; another 275 were openedinthe first halfo f 2002 (+3.5 percent over total schools inZOOl), benefitingmainlyZambCzia, GamandInhambane. 0 Teacher training in 2001: 956 teachers graduated from primary teacher training centers (CFPPs)-8 percent more than in 2000. Another 1,546 teachers graduated from primary teacher training institutes (IMAPs) (+147.7 percent). The total figure o f 2,502 easily surpasses PARPA target o f 1,680 primaryteachers trainedper year.  - 10- Interms of the geographic distribution of teaching staff, PARPA envisaged efforts targeting the provinces o f Cab0 Delgado, Nampula, Zambtzia and Sofala. At the present time, Nampula, Zambtzia andCab0 Delgado havethe largest number o f schools. Overcoming gender disparities in access to education is one o f the main vectors o f government action. This policy emphasis is justified by empirical evidence showing a strong correlation between literacy levels among mothers andthe level o f well-being inthe household unit: Figure 3 shows that the proportion of girl students inEP1 improved during 1995-2001, rising from 41.8 percent in 1995 to 43.9percent in 2001, broadly in line PARPA target o f 44percent. First semester figures for 2002 suggest this ratio will reach 44.6 percent for the year as a whole, thus fulfilling PARPA target of 45 percent. At EP2 level, the proportion o f girls inthe total enrolment remained relatively stable throughout the period. From 40.3 percent in 1995, the ratio edged down to around 39.3 percent in2001 and 39.4 percent in2002-figures that were below PARPA expectations o f 40.5 percent and 41.5 percent respectively. The relatively stable behavior o f the proportion o f girls andthe consequent slow growth inthis indicator also reflects popular traditions that tend to restrict opportunities for girls' advancement. 0Proportionof girls inEP1 WProportionofgirlsinEP2 Note: Figures for 2002 are estimates. Source: MINED-National PlanningOffice, 2002. Further expansion of girls' access to the education system, in a context o f poverty reduction, will continue to depend on govenunent efforts in this direction-including actions to mobilize and raise awareness among parents and educational guardians o f the relevance and importance o f children's education generally, and girls' education inparticular. Interms ofeducation quality, dropout andrepetitionratesinthe various school subsystems pointto a series o f constraints. Figure 4 reveals a relative standstill inthe recent trend o f grade promotionrates Empirical studies conductedin several sub-SaharanAfrican countries reveala positive correlationbetween per-capita consumption levels andwomen's schooling.  -11 - at lower levels, which can be explained by several factors-pedagogic, administrative, sociocultural andeconomic, amongothers. Figure 4 I Pass rates Y" 85 80 75 70 65 60 55 50 45 EPl EP2 ESGl ESG2 Technical- Teacher Training 01999 Fa2000 Prdesslonal 2001 Source: Balanco doprograma de actividades, 1O Semestre2002 (July 2002). Project0 de Plano de Efectivos escolares para 2002 (August 2001). MINED - National Planning Office. Notes:Average passrates indaytime andnight-classes weighted by the number of students, 2001. Technical-professional schooling: Elementary, Basic (commercial andindustrial) and Secondary. Teacher training: CFPPs and IMAPs. EP1 = lower primary, EP2 = upper primary, ESGl = lower secondary, ESG2 =upper secondary. T h i s situation shows that, without neglecting quality, the sector has focused on expanding access, in order to satisfy growing demand at different educational levels. Recent activities to strengthen the education quality improvement component do not seem to have had a significant effect as yet. The following key actions inthis direction were implemented in2001 andduringthe first halfo f 2002: Renewal o f the basic education curriculum: the redesign of primary education was completed in 2001, and the experimental phase began in 29 pilot schools in January 2002. PAFPA foresees implementation o f the new curriculum in 2003, and the sector i s working on this with a view to its nationwide introduction startingin2004. In-service teacher training: in 2001 Teacher Training Nuclei were formed inthe IMAPs, and progress was made inpreparing new courses. A total of 4,48 1 school directors andtheir deputies were trainednationwide, which was better than planned (1,340 directors and assistantsto be trained annually). Overall, 10percent of leadership posts are heldby women. Expansionand revival o f Zones o f Educational Influence (ZIPS), by providing materials and strengthening their capacity for pedagogic supervision inschools (trainingo fcoordinators).  - 12- 0 A total of 9,750,270 books were distributed to 2,889,151 students enrolled in public and community schools. This formed part o f the free textbook distribution plan in the Caixa Escolar program, covering all children inbasic education. There i s a clear need for more aggressive implementationo f sectoral policies aimedat improving the quality and relevance o f education. Inparticular, the curricular change process at the EP1 and EP2 levels needs to be accelerated and extended into the secondary and technical-professional levels, where only small-scale specific changes have been introduced thus far. With regard to in-service training, courses for teachers recruited with no pedagogic qualifications need to be introduced and expanded. Inactivities aimed at improving access to education, inter-regional balance should not be neglected. (b) Healthsector Alongside education, the health sector also has an important place in government policy, given its mission to promote andpreserve a healthy population. The 2000-2004 govenunent program stresses the need to universalize basic healthcare throughout the population, in conjunction with universal access to primary education, in order to expand the supply o f healthier, better trained and more motivatedhumanresourcesthroughout the country. Inkeeping with the Strategic Health Plan (PESS), PARPA establishes the following objectives inthis strategic area: improving the quality o f primary healthcare and access to it (motherchild health and adolescent health); and combating the major endemic diseases (malaria, tuberculosis and leprosy) and HIV/AIDS. Achieving these objectives requires expandmg the health network, developing human resources and improving planning and managementmethods inthe sector. Health-sector performance was analyzed on the basis of indicators chosen for their close relation to the aims described above: the intra-hospital maternal mortality rate; the infant mortality rate; the prevalence o f intra-hospital low-weight births; the percentage o f children under one year o f age that have completed the DPT 3 immunization program; the coverage o f institutional births; and the distributiono fcondoms inSTD/AIDS preventive actions carriedout by healthcare units. Figure5 shows the trend of the intra-hospital maternal mortality rate during 1995-2002, which is an indicator o f health sector performance in the women's health component. In 1995, the maternal mortality rate was 1.84 per 1,000 live births.PARPA 2001-2005 set a target o f 1per 1000 live births to be reached by 2005 (shown as the continuous line in the graph). Mortality fell significantly in 2001, but in2002 ithas remained above 1.6 per 1,000.  - 13 - Figure 5 Maternal mortality rate (per 1000 live births) 2.5 I 1995 1996 1997 1998 1999 2000 2001 2002* Source: MISAU PlanningandCooperation Office, 2002. (*) Estimate for the first halfo f 2002. - One o f the key action areas in the mother-child health component involves expanding access to primary care. This is measured by the coverage o f pre-natal check-ups, institutional births, post- delivery consultations andthe number o f new users o f family planning services. The following table shows that PARPA targets inthis domainhave generally been achieved. Coverage indices I 2000 PARPA 1 2001 2002 Observed 1 PARPA 1 Observed IPARPA IObserved (lsthalO* 1 Pre-natalcheck-ups 95% 105% 96% 105.8% 97% 54.5% Institutionalbirths 45% 40.3% 47% 41% 48% 20.8% Post-delivery consultations 50% 50.0% 52% 51% 54% 24.1% New users o f family planning services 13% 7% 13% 7.6% 15% Although Figure 6 shows a growth trend in the proportion o f women giving birth in healthcare institutions, PARPA 2001-2005 targets inthis case have not always been achieved. From 28 percent in 1995, institutional birthcoveragehadclimbed to 41percent by 2001. Butdespite this progress, a large proportiono f women, particularly inrural areas, continue to deliver their babies with assistance from traditional midwives. This has resulted in an increase in the number o f deaths caused by complications arisingduring childbirth. Efforts to overcome this problem are included inthe priority o f extending the healthnetwork to the most remote regions of the country.  - 14- Figure 6 rI Coverage of institutionalbirths:observedvs. PARPAtargets 6o 50 40 30 20 10 0 1995 1996 1997 1998 1999 2000 2001 2002' 2003 2004 2005 BCoverageof institutionalbirths OPARPA 2001-2005 operational targets Source: MISAU-Planning and CooperationOffice, 2002. (*)MPFestimatefor 2002, basedonfirst semester data. Inthe child health component, the mainobjective is to reduce infantchildhoodmortality to 200 per 1,000 live births by 2005. Figure 7 shows a declining trend inthe infant mortality rate, which has fallen from 145.7 per 1,000 live births in1997, to 127in1999 and 129.4inthe f r s t halfof 2002. Figure7 II Infant mortalityrate 150 1 145 140 135 130 125 120 115 I 1997 1999 2001 Source: INE, 1997Census and QUIBB.  - 15- Inthe childhealthcomponent, the sector has concentrated onimprovingprimaryhealthcare services and preventing the major endemic diseases through the extended immunization program. Actions in 2001 have included introduction o fthe tetravalent andhepatitis-B vaccines, and the use o f disposable syringes. Table 3 gives coverage indices indicating the progress made inthese areas. Table 3: Coverageindicesof the ExtendedImmunizationProgram,2000-2002 Coverage indices 2000 2001 2002 PARPA Observed PARPA Observed PARPA Observed (1st semester)* Firstmedicalcheck-up, 0-4 years old 60% 58.9% 62% 48% 64% 35% Firstcheck-up, 0-11months old 95% 100% 96% 100% 97% 89% Inoculation o f infants under 1year old against Tuberculosis 97% 100% 97% 97% 98% 41% Inocu1ationofinfants9-23months88% I 95% 1 I 96% 1 82% 1 97% I oldagainst Polio and DPT 43% Inoculationo f infants 9-23 months I I I I I I old against Measles 95% 97.1% 96% 94% 97% 47% Inoculation o f women of childbearing age against Tetanus 25% 9.9% 27% 7.1yo 29% % Figure 8 shows the trend incoverage of full DPT3 immunization for children under one year old. Compared to a figure o f 57.3 percent in 1995, the coverage rate for this inoculation had climbed to 79 percent by 1998 and reached 82 percent in2000. The pattem o f improvement has beenreinforced by a simultaneous decline inthe rate of abandonment o f the DTP inoculation program between the first and third doses. This positive development serves as a quality indicator reflecting efforts made by the health authorities to correctly plan the inoculation timetable and circuit, supported by work done to mobilizethe community andraise awareness.  - 16- Figure 8 Percentageof childrenunder 1year old with DPT3vaccination complete: observed vs. target 95 90 85 80 75 70 85 Bo 55 50 1935 19B 1937 1998 1999 Zoo0 2001 2Mn' 2W3 2004 2035 Percentageof children 4 wlh vaccinationcomplete (DPTB) IlPARPA2001-2005annualoperatingtargets Note: (*)MPF estimatefor 2002, basedon first semester data. Source: MISAU-Planning andCooperation Office, 2001 Incombatingthe major endemic diseases, a variety ofactivities were carried out under the National Malaria Control Program, including the anti-vector campaign, and early diagnosis andtreatment. In the sphere o f prevention, priority was given to indoor spraying campaigns (protecting approximately 3.5 million people in2001), together with outdoor spraying inall provinces, and the distribution of mosquito nets (60,000 in2001, and 50,000 in 2002) inthe provinces o f Sofala, ZambCzia and Tete, andinMaputo City. Inactions to combat TuberculosisandLeprosy, basedonproposals by the NationalProgramfor the Control o f Tuberculosis and Leprosy, the logistics survey and preparatory phase for launch of the COMB1project were both completed during the f i s t half o f 2002. This project aims to speedup the Leprosy Elimination Program, and is scheduled for pilot introduction in Nampula in September (Nampula is the province with highest leprosy prevalence-8.9 cases per 10,000 inhabitants). Activities in the fight against tuberculosis and leprosy carried out during 2001 and the first half of 2002 include training for health workers and for supervisors of treatment given to patients in healthcare units. Priority aims are to raise the cure rate to 75 percent in the case o f tuberculosis, particularly in the central region (72.6 percent in 2000), and to reduce leprosy prevalence to under 1case per 10,000 inhabitants (4.5 per 10,000 in2000,3.8 in2001, and3.4 inthe first halfof 2002). Figure 9 shows the trend o f one of the key indicators o ffood and nutritional security, especially among children andwomen o f childbearingage, namely the intra-hospital low birthweight prevalence rate. In 1995, more than 13 percent of children born in the country's healthcare units had a birthweight below 2.5kg, which is associatedwith a deficient pattern o f nutritioninthe mother during pregnancy. Although the rate had fallen to 11.7 percent by 2000, there has since been an upturn during2001 andthe first halfof2002. PARPA foreseesarateo f 11percent being achievedby 2005.  - 17- Figure 9 Low birthweight (intra-hospital births) I 1995 1996 1997 1998 1999 2000 2001 2002 Note: Figures for 2002 refer to the first semester. Source: MISAU-Planningand Cooperation Office, 2002. Activities inthis domain were aimed at promotingnutritional education inhealthcare units andinthe community at large, in the framework o f the Food Security Program coordinated by SETSAN. In addition, food supplements were introduced using vitamin-A, ferrous salt and folic acid capsules, during the second round of the mother and child healthcare campaign; implementation o f the LOA programwas also continued. The main objectives inthe fight against sexually transmitteddiseases (STDs) and HIVAIDS, are to prevent infection andimprove the treatment o f patients, inkeepingwith the National Strategic Planto Combat AIDS 2000-2002. The key actions planned to prevent and reduce the impact o f HIV/AIDS include promoting condom use, running information campaigns, and creating and implementing Advisory and Voluntary Testing Bureaux (GATVs). Figure 10 shows the number o f condoms distributed between 1995 and 2001 by MISAU and other institutions. Distribution broke down during 2000 inthe wake o f the floods, as health-sector efforts were divertedto emergency actions. Significant growth was recorded in2001, despite failing to meet PARPA target o f 1.5 million for that year. Actions during 2001 andthe first half o f 2002 focused on education andinformation campaigns on STDs andAIDS, andthe openingandpromotion o f GATVs. A total o f six bureau were opened in 2001, and a further 18 inthe first half o f 2002. As many as 21,766 people submitted to voluntary testing between January and September 2002, which suggests that the number o f tests in 2002 as a whole could exceed PARPA target for the year o f 24,000. Prevention campaigns have also been intensified, especially with respect to mother-child transmission. Inaddition to prevention, the health sector i s also strengthening efforts inthe treatment area, giventhe rising number o fdeclared cases.  - 18- Figure 10 Number of condoms distributed 14000000 1 12000000 10000000 8000000 6000000 4000000 2000000 0 1995 1996 1997 1998 1999 2000 2001 Source: MISAU-PlanningandCooperation Office, 2002. The components for primary healthcare, combating major endemic diseases and HIV/AIDS all benefited from efforts made to expand the health network. In 2001, 43 healthcare units were constructed in the primary network (first-aid posts and health centers), mainly in Cab0 Delgado, ZambCzia and Sofala, and another 27 units were refurbished. In the secondary network, activities focused onrefurbishment andextension ofnine ruralhospitals andthe promotion o f six healthcenters to the wal hospital category. Inthe tertiary network, refurbishment was carried out inthe provincial hospitals o f Xai-Xai, Tete and Quelimane, and also at Maputo central hospital in the quaternary network. Quantity increases inhealth services need to be matched by efforts to raise quality. Priority actions in this arearelate to the training of healthworkers andthe provisioning of healthcare units. Inthe initial training domain (intermediate, basic and elementary level) 826 students graduated in 2001, with a further 990 graduations expected in 2002. In addition, 12 specialist doctors were trained inpriority areas. With regard to provisioning of medicines and other material in healthcare units, steps were taken to improve knowledge on needs, supply prioritization mechanisms and process-supervision instruments. Another basic objective inthe health sector i s to improve planningandmanagement. Inthis area, the Strategic Health Sector Plan was finalized and the strategic planning process i s underway in the provinces o f Inhambane, Nampula, Tete, Cab0 Delgado andManica. Annual provincial programming i s currently beingcomputerized. Analysis ofsectoral performance shows that activities have prioritized the goal ofincreasing the supply o fhealthcare services.The trendincoveragerates satisfies PARPA targets andis a clear indicationofthe progressmade bythe sector. Inthe fight against HIV/AIDS, preventionhas been given more importance than curative action, although treatment is now being strengthenedas the number of sick patients increases.The goal of improvingthe quality ofhealth servicesremains a challenge for the sector andneedsto be strengthenedinsectoral planningandexecution.  -19- (e) Agriculture and rural development Adopting the basic principles o f PROAGRI, PARPA has established the following key objectives for agriculture andruraldevelopment incontributing to poverty reduction: (i) an increase inagricultural output andproductivity, especially inthe family sector (this means greater andmore efficient use o f credit and factors o f production such as seed and land); (ii) an increase in the profitability of agricultural activity (purchase o f inputs and marketing o f surpluses in more accessible and competitive markets); and (iii)reduction infood insecurity. The Ministry o f Agriculture and Rural a Development (MADER), acting through the various components, needs to improve the quantity and quality of public services aimed at achieving the sector's objectives (training, development ..) and . preferentially targeting the family sector. A prerequisite for improving the provision o f MADER services i s development o fexisting institutional mechanisms. The most recent agriculture and livestock census (conducted in 1999-2000, with results published in July 2002) has shown that landplots o f between 0.2 and 2 hectares accounted for 79 percent of all cultivated landarea, and that 98 percent o fthe country's farms are smaller than3 hectares. Giventhat about 70 percent o f the Mozambican population i s rural, improvements in agricultural production should help reduce poverty. This analysis evaluates the production o f cereals, cotton, sugar and cashew nuts, given the impact o f these crops on household incomes. The data reported refer to the previous year, since agricultural seasons start in one year and end in the first half o f the next. Following the analysis o f production, an evaluation is made o f sectoral activities, based on currently available information. Cereal crops, particularly maize (which accounts for about 70 percent o f total grain production and occupies 62 percent of cereal crop-growing area), are mainly grown on small plots o f land (average cultivated area 1.22 hectares). Indeed, as much as 97.6 percent o f the total area devoted to maize involves small-scale operations. Maize is also important in measuring progress in commercial activity, since most householdunits that market their cereal crop production sell maize. Inthe 1997-98 season, grainproductionincreasedfrom about 1.359billionto 1,686 billiontons, and production inthe following seasons has stabilized around that level (Figure 11). Nonetheless, there were setbacks inthe 1999-2000 season, coinciding with the first floods, which destroyed agricultural infrastructure and causedinput markets to break down. Output recovered in2001, however, to grow by about 4.9 percent inthe most recent season(2001-2002). Productiono f sugarcanehas been trending upwards thanks to efforts by the govemment to revive the national sugar industry. In2001, the Marromeu factory came back on stream, thereby increasing the country's installed sugar production capacity, although Mmomeu and Mafambisse were both hit by the floodingthat occurred inthe first halfo f the year. Sugarcane output grew by 172 percent in2002, with all factories fully operational. Figures from the 1999-2000 agriculture andlivestock census show that about 60 percent o f the area o f sugarcane cultivation is carried out on large plantations, while 41 percent involves small-scale operations. Although the recent production trend mainly benefits the large producers, it also has an indirect impact on reducing poverty. The rehabilitation o f the sugar industry has creatednewjobs inrural areas generating increased incomes for the peasant population livingthere.  - 20 - Figure 11 Agricultural production: Cereal cropsand sugarcane 3 2000000 , 1600000 6 / - I- 1200000 800000 - 400000 *-*- /* 1 0, I Note:Figures for 2002 are estimates. Source: MADER-National Office o f Economic Affairs, Statistics Department, 2002. Figure 12 illustrates the output trend for cashew nuts and cotton betweenthe 1996-97 and2001-02 seasons. According to the 1999-2000 agriculture andlivestock census, 88 percent of areas sown with cotton and 98.75 percent o f cashew growing areas are small-scale operations. These two crops form part of Mozambique's agricultural export base; about 49 percent of the cashew crop and nearly all cottonproduction i s commercially marketed. Inthe 1999-2000 season, cotton production plummeted to around 35,000 tons as a result of the floods. Inthe most recent seasons, the prevalence of cyclicd weather-related shocks compounded by the low price o f cotton on the internationalmarket, have substantiallyhindered the sector's revival. In contrast, a representative cashew nut production series displays a rising trend, although leveling off slightlyinthe 1999-2000 and2000-01 seasons. The 2001-02 cashewcrop totaledabout 60,050 tons.  - 21 - Figure 12 Agricultural production: cashew nuts and cotton 1997 1998 1999 2000 2001 2002 -+-Cashew nuts +Cotton Source:MADER-National Agriculture Office, RuralExtensionDepartment, 2002. Table 4 shows output trends for grains, cashew nuts and cotton seed, inrelation to PARPA targets. Althoughproductionhas been increasing, it does not yet meet those targets. Table 4: Agriculturalproductioninthe 2000/01-2001/02 seasons (Tom) 2000/01 season 2001/02 season Target Outturn Result Target Outturn Result Cereal crops 1,686,000 1,650,000 1,768,0000 Achieved Cashew nuts 60,000 53,613 Not achieved 79,400 60,050 Not achieved Cotton seed 95,000 71,048 Not achieved 110,000 79,713 Not achieved As indicated at the start o fthis chapter, expanding output is one of several priority objectives for the agriculture sector. Data provided by MADER on activities carried out during 2000, 2001 and 2002 are more abundant ando f better quality when referringto the goal o f increasingfamilies 'production capacity and enhancing productivity,and specially as regards incentives for families to adopt better techniques, and the control o f pests and diseases. These activities are carried out by the agricultural services area (Rural Extension, Livestock, Production Support, and Research). Nonetheless, in keeping with PARPA requirements, there i s a growing tendency to outsource certain services (for example, sanitary assistanceinthe livestock component).  - 22 - The trend o f ruralextension services is monitoredthroughresults demonstration fields (CDRs) which serve as an indicator of the expansion and dissemination o f standards and techniques for rural communities inthe family sector. Figure 13 shows a risingtrend inthe number o f CDRs, resulting from the effort made by MADER to disseminate improved agricultural production techniques. Despite the effort the Statehas beenputtinginto training, it is competingwith NGOs to hire extension agents. Nonetheless, 23,808 CDRs were registered in 2001 with a further 33,920 in 2002; and the sector has been working to improve performance inthis activity. Figure 13 1 Rural extension 6000 ~5 550 540 5000 530 4000 520 510 3000 500 490 2000 480 470 1000 460 450 0 440 2000 2001 2002 * Demonstrationfields (CDRs) &Number of extensionagents Note: Figures for 2002 are estimates. Source: MADER -National Agriculture Office, RuralExtensionDepartment. Inorder to guaranteeland access rights, the key activities undertakenby MADER during 2001 and the first half o f 2002, were mainly aimed at simplifyingprocedural mechanisms relating to landuse rights. Inpromoting the commercialization o f agricultural products and access to input markets, key steps included three m j o r projects to create andconsolidate ruralmicro-finance institutions; together with improvements in the collection and dissemination o f information from provincial agricultural markets (SIMAP). With regard to the aim o f reducing food vulnerability, efforts by MADER to coordinate with other SETSAN institutions and activities failed to achieve the expected results; and activities to improve the nutritionsituationwere mainly confined to increasing agricultural output. Generally speaking, agriculture and livestock output expanded during the two seasons evaluated, despite failing to achieve PARPA targets. Analysis o f activities described inthe PARPA monitoring matrices for 2001 and the first half o f 2002, shows that efforts have concentrated mainly on stimulating production and increasing agricultural productivity-particularly through the dissemination o f improved techniques andprotection against pests and diseases, inline with PARPA objectives. Despite the effort made by the sector, it is hardto be specific about the degree to which goals have been achieved because o f a lack o f details on the execution o f activities provided by the sector. Ongoing work inthe framework o f the Agriculture Sector Expenditure Review has confirmed that agricultural services obtained the largest budget share inannual activity plans (PAAOs) between 1999 and2002 (around 42 percent). Institutional development is clearly the component that most increased its budget share, thereby reflecting the sector's determination to improve institutional mechanisms. This is one o f the key objectives pursuedby PROAGRI, inits mission to restructure MADER, which includes refocusing it  - 23 - and preparing it to meet new requirements arisingfrom the restructuringo f Mozambican agriculture inthe marketeconomy framework. Meanwhile, components relating to improved access to land, encouragement o f marketing and reduction o f food vulnerability need more attention interms o f planned activities and funding. These aspectsneedto be highlighted, inorder to upholdthe more broad-basedapproach o f PARPA. (d) Infrastructure The availability o f basic infrastructure i s the key to revivingpoverty-reducing economic growth, and the gains ineconomic growthachieved over the last five years are partly the result o f efforts made by the government to restore this. Nationwide coverage o f transitable highways i s still fragile, however, which has discouraged private-sector investment and slowed the development o f rural markets for agricultural inputs andproducts. This section evaluates progress made in fulfilling the PARPA 2001-05 infrastructure goals. The analysis is restricted to 2000-2001 andthe first halfof 2002, usingsectoral projectionsandthe degree o f execution o fprogrammed activities to assess the current situation. Roads The main aim in the highways sector i s to expand the coverage o f access roads, prioritizing those which: (i) afford access to national markets for poor isolated regions with agricultural potential; (ii) marketsexpand;(iii) reducetransportcosts;and(iv)helpdevelopthemaincorridors. help help The target is to reduce the proportion o fimpassableroads to under5 percent, andbadqualityroadsto under 25 percent, by 2005, through intensive use of labor. Figure 14, below, illustrates the trend of primary road maintenance and refurbishment activities in 2000-2002, indicating the degree o f fulfillment o f the sectoral plan. In 2000, about 12,700km o f roads received routine maintenance, and 617.4 kmunderwent periodic maintenance aimed at keeping them passable all year round. Inaddition about 332.5 km o f tertiary roads were refurbished, along with 259.9 kmo f secondary and 197.9 kmo f primaryroads. The following targets were set for 2001: (i) refurbishment o f 348 kmo f primary roads covering the following stretches, Muxhgue-Rio Save (48 km); Gorongosa-Caia (79 km); Nampula-Nacala (8 km); Vandki-Changara (14 km); (ii)refurbishment o f 243 km o f secondary roads as follows: Macomia-Oasse (86 km), Memba-Cava (93 km), and Cava-Lt'rio (60km); (iii) rehabilitation o f 658km o f tertiary roads; (iv)periodic maintenance covering 227km; and (v) routine maintenance on 15,00Okm, together with reconstruction andassembly o f six metallic bridges. As the graph shows, the level of compliance with the sectoral plantargets hasbeenquite satisfactory: 68.1 percent interms o fprimary road refurbishment; 98.4 percent for the refurbishment o f secondary roads; and 94.2percent in the case o f tertiary roads. In relation to PARPA targets, sectoral performance displays a 62 percent achievement rate for the rehabilitation o f secondary roads in2001, and about 112.7percent with respect to tertiary roads. In terms of periodic maintenance, the 2001 sectoral plan was 83.7 percent complied with (82.1 percent in the case o f routine maintenance). In addition, four metallic bridges were constructed and assembled during the year, which implies 66.7 percent compliance with the target set inthe sectoral plan.  - 24 - Figure 14 Highwayrefurbishmentand maintenance (2000-02) Routine maintenance 0 Periodic maintenance Refurbishment of tertiary roads 8 Refurbishment of secondary roads Refurbishment of primary roads 0 2000 4000 6000 8000 10000 12000 14000 Km 1,.R-12000 0~ea120010~lan2oo2 I Source: MOPH, Economic Affairs Office, 2002. Fulfillment o f targets in2001 was seriously disrupted by the floods that occurred inthe early months o f the year in the central and northem parts of the country. Although definitive data are not yet available on fulfillment o f the 2002 plan, levels o f compliance with activities programmed up to the end o f the first half o f 2002 were as follows: inrehabilitation work, 30.7 percent for primary roads, 64 percent for secondary, and 9.8 percent for tertiary roads; in maintenance work, 10.7 percent for periodic and 40 percent for routine maintenance. These figures point to an average compliance rate above 60 percent for the year as a whole. Eventhough the figures indicate increasedavailability o f access roads, additional efforts still needto be deployed in this area. Resource constraints, compounded by the devastation caused by the latest flooding, require a commitment towards high-quality constructioninorder to make access roads more durable. The use o f labor-intensive technologies, especially inperiodic androutine maintenance work on classified and unclassified roads, in conjunction with other capital-intensive technologies, has a multiplier effect on other sectors o f activity. Labor-intensive activities make it possible to raise income levels, particularly among rural families, which encourages greater consumer spending; while capital intensive activities boost expenditure on intermediate inputsproducedinthe domestic market, thereby stimulating development o f a whole range o frelatedanchor activities. Water and sanitation Access to potable water i s one o f the key vectors o f government action aimed at improving the population's living standards. Given its crucial importance for the country's socioeconomic development, PARPA establishes the following central objectives in the water component: (i) sustainablewateruse;and(ii) promote increasethe supply o f potable water andprovision of low- cost sanitation inurbanareas.  - 25 - The following key actions were programmed in2001 to fulfill the first objective: (i) rehabilitation o f the hydro-meteorological network, and installation o f a flood warning management office. Activities inthis area include refurbishmentof26 hydrometric stations (Inkomhti (7), Zambeze (3), Umbeluzi (2), Lago Niassa (2), Limpopo (l), (l), (l), (l), Banguza Muri Govuro Uinhamiquelene (l), Inhalompe (l), Capoche, Marromeu (1) and Lunho (1)). This meant an execution rate o f about Luia, 30percent, since 87 were originally programmed. In addition 12 pluviometric stations were constructed-just 1percent o f the 132 that had been planned; (ii) supervision o f compliance with international agreements relating to the management o f international rivers. Meetings and bidding processes were held as part o f this activity, in order to develop a Strategic Integrated Plan for the Management o f Water Resources in the Zambezi River. In 2001, joint studies concluded on the socioeconomic development opportunities o fthe Inkomtiti river basin. PARPA 2001-2005 set the following targets for increasing the supply o fpotable water andproviding low-cost sanitation in urban and rural zones: (i) raising coverage of water supply to urban and periurban populations to 50 percent, by refurbishing supply systems and reducing losses; and (ii) watersupplycoverageinruralareasto40percent,coveringsixmillionpeopleby2004, raising and ensuring sustainability o f local infrastructure management, particularly inZambkzia, Nampula andNiassaprovinces. To achieve these targets, 1,171 drinking-water fountains (standpipes) were constructed andor refurbished: 118 inNiassa, 163 inCab0 Delgado, 62 inNampula, 103 inZambCzia, 74 inTete, 59 in Manica, 144 in Sofala, 150 inInhambane, 145 inGaza, and 153 inMaputo. This corresponds to an average national coverage rate o f 35 percent. According to the figures shown in the table, the additional standpipes led to improved coverage rates inNiassa, Cab0 Delgado, Nampula, ZambCzia, Manica, Sofala, andMaputo. The PARPA 2001-2005 operational matrix does not set specific annualtargets for evaluating progress towards the goal set for 2005. To make a more complete andconsistent assessment o f progress inthis area, the sector would have to identify specific targets for each year, by zones (rural and urban), indicating the population to be covered. Nonetheless, evidence suggests that the country i s substantially on course to achieve average coverage of about 45 percent in water supply to urban, periurbanandrural populations by 2005.  - 26 - Table 5: Comparative analysis of water sector performance Source: MOPH,ESP Balance Sheet 2001. Inactivities to strengthen the improved latrine systeminurban, periurban and rural areas, 13,078 of the 20,000 latrines planned for construction were actually built, 855 o f these being destined for vulnerable population groups. This represented about 65 percent compliance. The various factors responsible for failure to achieve the target include delays inapproving the investment budget, and the irregular nature o f disbursements. The number of beneficiaries totaled about 65,390 people. Figures shown inTable 6 indicate a substantial increase inthe degree o f coverage among the target population.  - 27 - Table 6: Latrinesconstructed, beneficiarypopulationand coverage rate per project Population served Projects 2000 2001 Latrines Population Coverage Latrines Population Coverage Maputo andMatola 8 737 665 240 54 1237 671 425 56 Xai-Xai, Macia and Mandlhacaze 852 89 975 70 1662 98 285 78.9 Inhambane, Maxixe andMassinga 1426 79 470 41 1134 85 140 45 Beira andDondo 1239 105 205 25 1458 112495 27.1 Chimoio 1182 139035 59 1790 147985 64.2 Tete 890 35 660 24 1114 41 230 27.9 Quelimane/Mocuba 1730 68 700 35 1779 77 595 40 Nampula andAngoche 2 919 97 370 28 1517 104955 30.7 Nacala 821 37 460 19 413 39 525 20.4 Pemba andMontepuez 499 72985 45 299 74 480 47.5 Lichinga and Cuamba 795 34 590 49 675 31965 54.9 Total 21 090 1425 690 43 13 078 1491080 44.6 Source: MOPH, ESP Balance Sheet 2001. Coverage o f the target population increasedby 3.7 percent in2000-2001; ifa growth trend o f around 34percent per year i s maintained, the 50 percent population coverage target for the supply o f improved latrines, set by PAEWA for 2005, couldactually be surpassed. Energy The main PARPA objectives in the energy domain are as follows: (i)expand people's access to energy sources, and reduce the environmental impact o f the use o f non-renewable sources. As key actions to achieve this in the component relating to installation of electric power plants in district capitals, electrification was completed in 2001 in the following districts: Chi~ta,Guro, Nova Mambone, Macossa, Chinde, Mormmbala, Cheringoma, andNatnarrbi.Work is currently ongoing to complete electrification in a further 17 districts (including the localities of Nungu in Niassa, and BibilizaandIboinCab0 Delgado). Despite efforts deployed by the government to meet PARPA targets, the infrastructure base o f the Mozambican economy is still very fragile. Prioritization o f resource allocation inthe infrastructure area will require more clearly defined objectives, targets, indicators and concrete actions for each year, inorder to improve the monitoring andevaluationprocess. (e) Goodgovernance,legaliv andjustice, decentralization and deconcentration Although the 2001-2005 edition o f PARPA i s the first to include a separate chapter on Good Governance,Legality and Justice, this component has been receiving special government attention for some time, through a broad spectrum o f initiatives undertaken by various ministries andagencies  - 28 - at both central and provincial level. These are part o f a multi-institutional strategy implemented by the State to improve its dealings with citizens and their institutions, in the areas identified below. Initiatives include launchingthe public-sector reform program, initialapplication o f Decree 15/2000 on recognition and legitimization o f local authorities by their communities, and the provision of technical assistanceto all provincial governors andlocal State bodies. Legality, justice and public order - central government agencies are making major efforts to fulfill the various PARPA commitments, which reflect the expectations o f economic agents, social actors andsociety at large. Activities includethe following: The Integrated Strategic Plan for the justice sector was concluded in 2001, and work is currently ongoing to review the corresponding budget proposal and details o f operational indicators to implement the plan. Template projects for the creation o fLabor Tribunals infive provinces are still being prepared. With a view to improving prison conditions, rehabilitation work i s currently underway inthe Maputo Central Jail, the Central Jail o f Beira, the Mabalane Penitentiary, the Chimoio Agricultural Penitentiary and the Nampula Industrial Penitentiary. Alongside this, other civil works are being carried out insupport o fthe Justice sector. With regard to skill trainingandhumanization of staff, the prison guards trainingprogramhas been completed; training courses have also been held for inmates; two courses have been held for prison educators; andmanagementtraininghas been provided for prison directors. The activities monitoring system inthis area needs to be improved by specifjmg the number o f people covered andthe pass rate, among other quality indicators. As part of a drive to increasecapacity and improve performance among the forces o f law andorder, 570 new cadets were trainedonthe basic police course in2001, while the PoliceAcademy (ACIPOL) admitted40 new students. Partial-scope actions were implemented to improve prison services inpreventive detention units in Niassa, Zambkzia and Cab0 Delgado (Pemba and Montepuez). Inaddition, a wide-ranging program to rehabilitate installations and equipment in the Maputo, Beira and Nampula police stations was implemented, together with other building investments (new construction and refurbishment). This program has been extended to the prison system starting with rehabilitation work on the maximum securityjail inMaputo andthe Industrial Penitentiary o f Mieze (Cab0 Delgado), among others. Other important actions inthe 2002 program within the jurisdiction o f the Ministry o f the Interior (MINT) included the following: (a) investment inorganization, methods andtraining-through two courses held at ACIPOL, one for detectives and another on drugs; (b) a diagnostic study was carried out in the PFW provincial commands in Gaza, Inhambane and Sofala, as part o f the Police Station Rehabilitation Program; funds to execute the corresponding works remain to be assigned. The authorities also have tightened compliance with preventive prison terms, as part o f the effort to promote justice and legality. In addition, the names o f police officers discharged for engaging in activities incompatible with police functions have started to be publicized. Collaboration has also been intensified between the PFW, the Migration Services and Customs on the control and investigation o f transboundary crime. The mainconstraint on these actions at the sectoral level is the scarcity o f suitably qualifiedhumanresources. Restructuring and strengthening of public institutions in dealing with theprivate sector, other agents and the public. During 2001, the respective ministries (MICMAEMJUST) implemented a wide- ranging training program involving 77 officials, 33 magistrates, 40 legal officers and five legal  - 29 - assistants. Althoughthe MPF has been working to reformeconomic-activity licensing andinspection bodies to make themmore dynamic, there i s a need for more specific and detailed information on the concrete steps taken. Pursuant to its institutional brief, the MAE undertook a review of Decree 36/89 dealing with rules goveming the functioning o f State services; this culminated inDecree 30/2001 being approved, which lays down operating rules for public administration services. The decree sets forth guiding principles for the actions o f public officials, together with bureaucratic deadlines, with the aim o f improving citizen services. Other MAE activities include a review o f the General Civil Servant Statute (EGFE), with the aim of making this a regulatory instrument goveming relations between the State, civil servants, agents and citizens. In addition, the Public Administration Training System (SIFAP) was implemented to raise professional performance indices and improve the quality o f services; buildings were rehabilitated or constructed for district administrations and administrative posts, and training was providedfor civil servants at that level. Also in 2001, programmed construction work was completed in civil registry and notary offices in various parts of the country - including the provinces of Inhambane (Jangamo), Sofala (l3uzi) and Gaza (I3ilene)-together with building refurbishment in justice-sector buildings in Maputo (Marracuene), Nampula (Monapo), Gaza (Guijk) and ZambCzia (ne and Milange). The promotion o f the civil registries inMemba andMonapo (Nampula) andMontepuez (Cab0 Delgado) to conservatory rank helped to streamline procedures that previously had depended on conservatories located in provincial headquarters. As part o fthe modernizationof civil registry andnotary services, equipment including 12 computers was purchased in the first half o f 2002, and 25 staff were trained. At the same time, measures to simplifybureaucratic procedures were pursued. Inadditionto the conclusionin2001 ofanad-hoc revisionofthe Penal Code,the CodeofCriminal Proceduresis now inthe global reformphase. Protection of borders and maritime inspection the project to implement the Vessel Monitoring by - Satellite (VMS) system, to protect and patrol the country's territorial waters and maritime activities, was launched in 2002 following contract award to the successful bidder. Implementation o f the project is suffering from a lack o f coordinationamong participating institutions (MINT, MPESCAS), however. In the customs domain, steps were taken to streamline import clearance and VAT drawback procedures, andcustoms procedures were adaptedand simplified inorder to bringthem into line with the SouthernAfrican Development Community (SADC) trade protocol. Thefight against corruption - Although the Commissions for the Strengthening o f Legality have been created and are already operating, constraints on their maintenance and improvement still remain, stemming from the absence o f legal instruments institutionalizing their existence. Progress has been made, however, inpreparingthe professional ethics anddeontology project for staffholding positions o f responsibility inthe State apparatus.There have also been legal modernizationmeasures, including a revision o f Decree 51/95 creating the StateAdministrative Inspectorate. Decentralization and deconcentration - In connection with the objectives o f making local State bodies (particularly at the district level) more dynamic andbetter able to interact with other relevant social actors, and in order to institutionalize participatory planning and public administration measures, several actions included in PARPA were carried out, either partially or in full, including the following:  -30- Hearings were heldwithseveral sectorso f society for the purpose o freceiving submissions inrelation to the Local State Institutions and Complementary Legislation bill, which is to be sent to the Assembly o fthe Republic later this year. Inthe domain of institutionalization and expansion of participatory district planning, the fourth National Meeting o f the Decentralized Planning Program (May 2001) considered a new vision o f the Decentralization Strategy (see foundation document Apoio a Estratdgia de Decentralizaclio 2002- 2006 ["Support for the Decentralization Strategy 2002-2006"l). This includes the District Planning Program which aims to institutionalize and standardize the planning process in districts, giving special relevance to District Executive Councils (participatory component). Pilot schemes have been run in Nampula and Cab0 Delgado for the purpose o f fine-tuning methodologies and providing inputs for the production o f national standards.This is a very important project, given its role as a laboratory for a multi-functional methodology encompassing the decentralization o f district planning, participatory public-sector management systems and training, together with fund managementprocesses for public investments, improvement o f the provision and maintenance o f social infrastructure, and functions relating to planning and policy management in local (district) government. Inthe first halfo f 2002 a project was signed to extend the experiment to ZambCzia, Sofala, Tete and Manica. By the end o f 2002, 21 districts are expected to have the participatory district planning process in place, compared to 14 districts in 2001. Among other preparatory measures for implementing the project nationwide, a diagnostic study was made o f the institutional capacity o f district councils in all provinces, and seminars were held to publicize the district planningprogramproposal. Other actions are being carried out by the MPF, including the creation o f a support program for the 2002-2006 decentralization strategy, and a trainingprogram for DNPO and DPPF technical staff in the areas o f oversight andevaluation. It is important to recognize that while the authorities have made visible efforts to Will PARPA objectives on good govemce, there remain serious lapses, insufficiencies and deficiencies, whose resolutionrequires a more aggressive approach from the relevant public bodies. Shortcomings include cases o f prison overcrowding, conditions o f virtual indigence inside jails, and physical abuse stemming from a lack o f trainingamong prison staff, among other issues. 111.2. Evaluationof expenditureinFundamentalAction Areas -1999-2002 This section discusses the trend ofbudgetary indicators (planned andexecuted) during 1999-2002, in the light o f commitments assumed in PARPA framework. The evaluation covers total, current and investment expenditure, from the standpoint o f its distribution among the fundamental action areas (especially education and health) and geographically. The discussion relies on the 2001 and 2002 State Budgets, intheir original andrevisedversions, together with execution figures up to September 2002, since this i s the most recent and indicative information o f the likely execution o f public accounts during2002 as a whole. The analysis i s based on public expenditure data recorded by the MPF public accounts services. The specific information sources used in preparing this document were as follows: the General State Accounts (CGE) for 1999 and2000; the General State Account for 2001;the expenditure forecast for 2002, as set out inthe revised 2002 State Budget, approved by the Assembly o fthe Republic; andthe Budgetary Execution Report for the third quarter o f 2002 (cumulative figures covering January- September).  - 31 - (a) Total expenditure Total expenditure inthe priority sectors trended upwards during 1999-2002, rising from 13.3 percent o f GDP in 1999 to around 19.1percent in2001. A figure o f 18.4 percent is forecast for 2002. PARPA criteria call for the fundamental action sectorsto be guaranteedincreasing weight inrelationto GDP. Table 7 TOTAL EXPENDITURE ON PARPA PRIORITYAREAS (1999-2002) 1999 2000 2001 2002 TOTAL EXPENDITURE IN PRIORITY SECTORS As a percentage of GDP 13.3 19.0 19.1 18.4 As a percentage oftotal public expenditure 60.1 67.6 64.3 65.0 As a percentage of total public expenditure excluding interest on the public debt 62.0 68.1 65.8 67.8 TOTAL EXPENDITURE IN PRIORITY SECTORS AS % OF GDP EDUCATION 3.5 5.5 6.8 4.8 HEALTH 2.9 3.6 2.9 3.8 HiVlAlDS 0.0 0.0 0.2 0.2 INFRASTRUCTURE 2.9 4.4 5.0 4.8 AGRICULTUREAND RURAL DEVELOPMENT 3 1.1 1.7 1.o 1.5 GOVERNANCE,SECURITYAND JUDICIAL SYSTEM 1.9 2.2 2.2 2.1 OTHER PRIORITYSECTORS 1.1 1.5 1.o 1.2 TOTAL EXPENDITURE IN PRIORITY SECTORS (As a percentage of total excluding interest on the public debt) EDUCATION 16.1 19.8 23.3 17.8 HEALTH 13.4 12.9 9.9 14.0 0.0 0.0 0.5 0.8 ~~ HIVlAlDS INFRASTRUCTURE 13.3 15.7 17.4 17.5 AGRICULTUREAND RURAL DEVELOPMENT 3 5.2 6.3 3.4 5.5 GOVERNANCE,SECURITYAND JUDICIAL SYSTEM 8.9 7.8 7.7 7.7 OTHER PRIORITYSECTORS 5.0 5.6 3.6 4.5 ~~ Source: CGE 1999,CGE 2000, CGE 2001 and Revised SB 2002. Throughout 1999-2001, expenditure onthe priority sectors always accounted for over 62 percent of total expenditure, excluding debt interest. As Table 7 shows, this ratio displayed a risingtrend, in keepingwith PARPAresource allocation criteria that encourageprogressively higher expenditure in sectorsrelated to the fundamental action areas. Table 8 shows that in2001 the priority sectors' share o ftotal public expenditure inthe executed State Budget (excluding debt interest) was 2.4 percentage points below PARPA target o f 68.2 percent (according to the General State Account 2001). For 2002 this indicator i s expectedto surpass the target: i.e. expenditures on the fundamental action areas shouldamount to 67.8 percent o ftotal public expenditure excludingdebt interest.  - 32 - Table 8 TOTAL EXPENDITURE ON PARPA PRIORITY AREAS (2001-2002) 2001 I 2002 Executionnte SB Revised(MIExecut.d sB (In relationto PAR~A complementaryp e ~ d ) tCGE, PARPA Initial SB RevlsedSB RevisedSB) 3rd quarter TOTAL EXPENDITURE IN PRIORITY SECTORS 45.2 As a percentage of GDP 19.4 19.1 17.9 18.4 As a percentage of total expenditure 67.4 63.9 64.3 65.0 63.2 65.0 As a percentage of total expenditureexcludingintereston public debt 68.2 65.4 65.8 66.1 66.1 67.8 TOTAL EXPENDITURE IN PRIORITY SECTORS (As %of total oxcl. debt Intororl) EDUCATION 24.8 22.8 23.3 19.8 18.8 17.8 54.8 HEALTH 11.5 10.4 9.9 13.1 14.2 14.0 32.3 INFRASTRUCTURE 18.2 16.9 17.4 19.1 18.0 17.5 37.2 AGRICULTUREAND RURAL DEVELOPMENT 3.8 3.4 3.4 3.9 3.4 5.5 52.4 GOVERNANCE, SECURITY AND JUDlClALSYSTEM 8.2 8.0 7.7 7.7 7.5 7.7 65.0 OTHER PRIORITYSECTORS 1.8 3.2 3.6 2.4 3.3 4.5 43.3 Source:PARPA, RevlsedSB 2001, CGE 2001, initlalSB 2002, RevisedSB 2002, ExecutionReport 2002.W Sectors in the fundamental action areas display low levels o f budgetary execution (45.2 percent) for Januar-September 2002. Nonetheless, this is consistent with global budgetary executionfor the first three quarters of the year (52 percent o f assigned budget, excluding debt interest, according to the Revised 2002 State Budget and Q3 Budgetary Execution Report). The overall budgetary execution rate could increase during the fourth quarter, but an additional execution effort would be needed to achieve this. Section (d) analyzes execution rates for the current and investment expenditure components. With regard to the sectoral composition o f public expenditure, both programmed and executed (as shown in Table 7), the education, health and infrastructure sectors absorb the largest shares o f the total, jointly accounting for 42.8 percent o f total expenditure in 1999 and about 51 percent in2001. Duringthat period, education andinfrastructure bothincreasedtheir shareo ftotal public expenditure. In January-September 2002 the priority sectors accounted for about 60percent of total executed expenditure (See Figure 15). The education, infrastructure, govemance, security judiciary andhealth sectorsagain claimthe largest individual shares inthe total.  - 3 3 - Figure 15 COMPOSITION OF TOTAL EXPENDITURE(excl. debt interest) EXECUTED DURING 3RD QUARTER2002 OTHERSECTORS 41 1% n d T H 8 7% NFRASTRLCTURE 12 5% OTHER PRIORITY .._, ." AGRICULTVREAND RURAL ECrTnDE ", DEVELCPMEM 3 7% GPNDVJUDlClAL,SECURW O E W E 5 5% SYSTEM 9 6% Source: Execution Report 3rdquarter 2002. Note: "Other sectors" correspondsto expenditure made under Remaining Sectors andGeneral StateExpenses(expenditure not imputable to sectors, such as transfers, subsidies, etc. excluding interest). Although SB execution levels in January-September 2002 are low in absolute terms, they are generally better than the equivalent figures of a year earlier (see Figure 16). "Governance and Justice", Education, Agriculture and "Other Priority Sectors" display the highest rates o f budgetary execution as o fSeptember2002.  - 34 - Figure 16 STATE BUDGET(SB) EXECUTION 3RD QUARTER 2001 AND 2002 - (Yo OF ANNUAL PLAN) 70 BExecution report 2001 Q3 60 50 40 30 20 10 0 0 EDUCATION cwm INFRASTRUCTURE AGRICUTURE N O RURAL GOMFWWE. OTKR PRIORITY SECURrrYAND SECTORS DEMLOPMENT JUDICIA SYSTEM Source: Revised SB 2001; Revised SB 2002; ExecutionReports 2001 Q3 and2002 Q3. (b) Current expenditure Operating expenditure inthe priority sectors averages about 7 percent of GDP, andhas absorbedover 50 percent of total current expenditure in the State budget, excluding public debt charges (interest payments), every year between 1999 and 2001-rising from 50.8 percent in 1999 to 53 percent in 2001, as showninTable 9.  - 35 - Table 9 OPERATINGEXPENSESIN PARPAPRIORITYAREAS 1999 2000 2001 2002 TOTAL OPERATINGEXPENSESIN PRIORITYSECTORS (As a percentage of GDP) 5.9 7.2 7.3 7.2 (As a percentage of total currentexpenditure) 48.1 52.7 50.6 50.0 (As a percentage of total current expenditureexcl.debt interest) 50.8 53.5 53.0 54.4 OPERATING EXPENSESIN PRIORITYSECTORS (As a percentage of total operatingexpenditurein priorityrectors) EDUCATION 43.0 44.8 46.7 46.2 HEALTH 18.7 19.3 20.0 22.9 HIV/AIDS 0.0 0.1 0.0 0.0 INFRASTRUCTURE 1.4 3.2 1.1 1.1 AGRICULTURE AND RURAL DEVELOPMENT 4.7 3.7 3.3 3.0 GOVERNANCE,SECURITYAND JUDICIALSYSTEM 28.8 25.3 24.9 23.5 OTHER PRIORITYSECTORS 3.4 3.7 4.0 3.4 Source:CGE 1999, CGE 2000, CGE 2001 and Revised SB 2002 On average, the education, health, governance andjustice sectorsjointly account for about 90 percent o f current expenditure inthe priority sectors; education andhealthalone account for two thirds. (c) InvestmentExpenditure As shown intable 10, below, the priority sectors absorb an average o f 77.6 percent o f total public investment expenditure. The infrastructure, education and health sectors take the lion's share (about 75 percent o ftotal public investment expenditure insectors relatedto the fundamental action areas). Table 10 INVESTMENTEXPENDITUREINPARPAPRIORITYAREAS 1999 2000 2001 2002 TOTAL INVESTMENTEXPENDITUREIN PRIORITYSECTORS (As a percentage of GDP) 7.4 11.7 11.8 11.1 (As a percentage of total investmentexpenditure) 74.8 81.9 77.3 76.3 INVESTMENTEXPENDITUREIN PRlORiTYSECTORS (As % of total investmenlexpenditurein prioritysectors) EDUCATION 12.7 19.5 28.4 13.7 HEALTH 23.9 18.6 12.1 19.4 HIV/AIDS 0.0 0.0 1.3 1.8 INFRASTRUCTURE 37.2 35.3 42.1 41.1 AGRICULTUREAND RURAL DEVELOPMENT 11.4 12.6 6.2 11.6 GOVERNANCE,SECURITYAND JUDICIAL SYSTEM 3.0 3.0 3.6 3.6 OTHER PRIORITYSECTORS 11.8 11.0 6.3 8.8 Source:CGE 1999,CGE 2000, CGE 2001 and Revised SB 2002.  - 3 6 - (d) Executionof current and investmentSBfor January-September2002 Generally speaking, SB execution levels for January-September are higher in the current budget (excluding debt charges) than inthe investment category (see Figure 17), with government tending to prioritize operating expenses, including wages and the procurement o f goods and services such as medicines and hospital equipment, etc. This is valid for the fundamental action areas and other government sectors alike. Expenditure execution in"Other Sectors" i s higher thaninthe "Priority Sectors". It should be stressed that inthe "Other Sectors" category, General State Expenses (i.e. expenditures that cannot be imputed to specific sectors, such as transfers, subsidies etc.) account for halfo fthe total executed (44 percent o f current and 54percent o f investment expenditure in "Other Sectors"). Execution rates in the General State Expenses category are quite high (especially treasury operations involving current transfers to public administrations in the context o f decentralized budgetary management). This explains why execution rates in"Other Sectors" are generally higher thaninthe "Priority Sectors". Figure 17 EXECUTIONOF CURRENTSB AND TOTAL INVESTMENT SB BETWEEN JANUARY AND SEPTEMBER 2002 @)yo 1 ............................................................................................................................................................ 70% 60% 50% 40% 30% 20% 10% 0% I CURRENT (excl. interest) TOTAL INVESTMENT Source: ExecutionReport 2002 43 andRevised SB 2002. Notes: "Current Expenditure" excludes debt interest; ``Other Sectors" corresponds to expenditure in Remaining Sectors and General State Expenses (Le. expenses not imputable to sectors, such as transfers, subsidies, etc). O f total current expenditure in Other Sectors (excluding debt charges), 56 percent correspondsto RemainingSectors and44 percent to General State Expenses. (e) Geographicdistributionof expenditure Figure 18 shows the trend of provincial spending during 1998-2001, in comparison to total SB expenditure. Provincial expenditure includes all public spending programmed and executed at the level o f the respective province; but it excludes expenditures which, despite benefiting individual provinces, are executed centrally. However, some projects could be recorded at both central and provincial level, such as rural electrification. Municipal public expenditure is recorded at the central level as a transfer to public administrations. Dependingon the value inquestion, such expenses may be transferred andrecorded at the provincial level. This type o f expenditure is essentially aimed at supporting municipios and executing projects inthe fields o f sanitation, water supply, combating erosion, promotion o f a healthy  - 37 - environment, education and health. Inprinciple, municipios ought to finance the major part of such projects, but given their weakness in generating financial resources locally compounded by low technical capacity, central government i s calleduponto co-finance or execute such projects in111. Provincial expenditure has grown from 31percent to nearly 40 percent o f the total State budget from 1998to 2001, despiteremainingat very low levels inabsolute terms. Inrelation to GDP, provincial expenditure grew from 4 percent in 1998to 7.4 percent in2001. Figure 18 Trend of provincialand total expenditure (at 2001 prices) 20,000 - 8 - cE 15,000 L .Es- - - v) 10,000 39 5% 5,000 - c 31.4% 3-3 1% t 0 1 1998 1999 2000 2001 +Total ProvincialExpenditure(and as a percentage of total expenditure) -Total Centraland ProvincialExpenditure(domesticcomponent) Total Centraland ProvincialExpenditure(includingexteralfinancing) Source: MPF. CGE 1998, 1999,2000 and 2001. Figure 19, below, shows that all Mozambican provinces increased their spending in absolute terms between 1999 and 2001. Figure 20 reveals that the provinces inthe north and south o f the country expanded their overall share of total executed provincial expenditure during January-September 2002, while Maputo City and the country's central provinces, apart from Sofala, saw their share decline. Nonetheless, the northern provinces' increased share o f total public expenditure does not necessarily reflect higher provincial spending inper capita terms. Factors contributing to this phenomenon include: low capacity among certain provinces for generating resources locally, lack o f capacity to awardinvestment projects at the provinciallevel, and a needfor greatercontrol inexecuting current expenditure, especially wages inthe education sector.  - 3 8 - Figure 19 Distribution of executed provincia1expenditure 800,000 .-8 u) 700,000 600,000 'J 500,000 (c 400,000 0 300,000 5 -.pc u) 200,000 100,000 n Niassa Nampula Tete Sofala Gaza Maputo Manica Cab0 Delgado Zambezia lnhambane Maputo Citv Figure 20 Cabo Delgado ZambbziaTete Manica SofalalnhambaneGaza Maputo Maputo City Source: SB ExecutionReport 2001 Q3 ,and SB ExecutionReport 2002 Q3. Figure 21 shows the trend of provincial andtotal current expenditure. Provincial expenditure is most important at the operational level, largely because the provincial share of current expenditure inthe education andhealthsectorsi s high.  - 3 9 - Figure21 Trend of provincialand total current expenditure (at 2001 prices and % of provincial expenditurein total) 12,000 10,000 p 8,000 8 r 6,000 .- - -s 5 4,000 2,000 0 1 1998 1999 2000 2001 +Total provincialcurrent expenditure -#-Total current expenditure Source: MPF CGE 1998,1999,2000and 2001 ~ For reasons pertaining not only to economies o f scale but also to management capacity, large-scale public investment expenditures, such as infrastructure works, tend to be carried out by central government agencies, regardlesso ftheir location. Consequently, provincialinvestment expenditure is not very large. Figure 22 shows the trend o f per capita current expenditure ineach province. From 1998 to 2001, average provincial current expenditure per capita increased, inreal terms, by about 88 percent on a cumulative basis. The provinces o f Cab0 Delgado, Nampula, Zambtzia andInhambane remain below the provincialaverage, however, and amajor government effort is requiredto reversethis situation. This distributionofcurrent provincial expenditure per capita i s determined by the needfor highlevels o f expenditure in Sofala and in Maputo Province and City. This i s where most govement administrative apparatus is located, including service-providing institutions at the central and provincial level. Inthe province o f Niassa, population i s a major reason why its per capita current expenditure i s way above the provincial average.  - 40 - Figure22 Provincial expenditure per capita (in2001 meticais) I 500,000 1 450,000 { n 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 About 52 percent of total education spending i s carried out by provincial bodies. Figure 23 illustrates the distribution of such expenditure between provinces. Figure23 Education:Inter-Provincialdistributionof per capitaexpenditure in 2000 (Meticais) 1 Zambezla Nampula Cab0 Delgado NIasSa 0 25,000 50,000 75,000 100,000 125,000 150,000 175,000 200,000 Source: MPF,General State Account 2000.  - 41 - During 1998-2000, per capita expenditure on education increased in all provinces, as shown in Figure 24. Nonetheless Cab0 Delgado, Nampula and Zambtzia were always below the provincial average. Figure24 Education:Interprovincialdistributionof per capita expenditure1998-2000(Meticais) 250,000.0 200,000.0 VI I1999 50,000.0 0.0 Niassa Zambezia Sofala Nampula Tete Manica GazaMaputo Average Cab0 Delgado lnhambane MaputoCity Of total health expenditure, only 23 percent is executed at the provincial level (see Figure 25). The regionalpatterninthe health sector is broadly similar to that of education.  - 42 - Figure 25 Health: Inter-Provincialdistribution of per capita exenditure in 2000 (Meticais) Average 1 I Maputo City MapJto Gaia .nhamoane Sofaa Manica -7 ~ Zamb&ia Nampula Cab0 Delgado Niassa 0 10,000 20,000 30,000 40,000 50,000 60,000 Source: MPF, General State Accounts 2000. As in education, per capita provincial expenditure in the health sector rose throughout 1998-2000. The same three provinces were againbelow the provincial average (see Figure 26). Figure 26 Health: Inter-Provincialdistribution of per capita expenditure 1998-2000 (Meticais) 1998 1999 02000 I  - 43 - &I Conclusions Ingeneral, the government has succeededinallocatingresourcesincreasinglyonthe basisofPARPA objectives and poverty reduction targets. Nonetheless, the scarcity o f resources, both financial and human (qualified technical personnel in all regions of the country), has made it more difficult to achieve those objectives. The analysis o f the datashows quite low levels ofbudgetary execution, mainly at the provincial level. This highlightsthe need for government to press aheadwith efforts to decentralize competencies and finance, to ensure actions aimed at national development are reflected at provincial and local level alike; and, more specifically, to reduce regional imbalances. Inthe case of the municipios, the government must clearly continue channeling resources into the education and health sectors. New infrastructure projects are also needed, especially with a view to improving basic sanitation conditions, potable water supply, environmental conservation and road maintenance. The ongoing need for central government to co-finance municipal budgets stems from the fact that expectations promoted when the municipios were created, that they would gain increasing budgetary autonomy through internally generatedrevenues, have not been fulfilled. As a result o f their inability to generate sdficient resources locally to finance the necessary activities, social installations and basic infrastructures steadily deteriorate, seriously undermining the activities and living standards o f municipal inhabitants. Alongside continuing co-participation, studies need to be conducted with a view to raisingthe fiscal capacity of the municipios by makingrevenue collection andresource management more efficient, so as to reduce their dependenceonthe General State Budget. In2003, the government is planningto implement measures to strengthen administrative-financial capacity at the local level, and the 2003 State Budget increases the proportion o f funds channeled to the provinces. Inthe investment category particularly there is increasedprovincialfunding, especially for Sofala, Tete, Niassa, Nampula and ZambCzia, in order to finance infrastructure development programs o f various kinds. GENERALCONCLUSIONSAND RECOMMENDATIONS The monitoring and evaluation o f PARPA execution during 2001 and the first semester o f 2002 provides a measurement o f the effort made by the government, through the different sectors, to achieve the objectives set out in the fundamental action areas. By analyzing data and information provided by participants, it is also possible to identify progress and pinpoint the weaknesses that hinder full achievement o f the goals and objectives defined for 2001-2005. This chapter intends to structure the main conclusions and put forward general recommendations for consideration in work between the MPF and the different sectors. These would aim to make PARPA execution more efficient, by applying the monitoring and evaluation strategy more effectively, and seeking to improve it, and by introducing timely corrective measures to render the objectives set out in government strategies more realistic andachievable.  - 44 - 1.Improvementofthe budgetandplanningsystem Analysis of PARPA compliance levels inthe periods studied highlightsthe need for a major effort in the areas indicatedbelow: We reiterate the critical h c t i o n o f annual planning specifically through the ESP and SB, which should integrate the targets and actions associated with the objectives, programs and strategies selected in medium-term planning instruments-particularly PARPA, as an integral part o f the government's program. Thus, the ESP and SB become tools for conducting a permanent (annual) review o f action proposals and resource allocation in PARPA and its operational matrix, and obviously o fthe other medium-termplanninginstruments also. Changes inplanning should be aimed at improving the choice o f activities by prioritizingandforging closer linkage betweenactions andtheir expectedresults. It i s therefore essential to improve planning instruments by using indicators that seek to reflect sectoral performance in a more concrete fashion, along with others that make it possible to relate sectoral efforts to changes in welfare levels among the population. Sectoral planningshould help clarify programs andprojects, consistently with global objectives and targets. Ingeneral, a clear and strict (provincial) regionalizationo f programs andprojects is required, along with the corresponding resource allocation. An effort also needs to be made to calculate detailed cost estimates in project and program budgeting. This will encourage a deepening and improvement o f the overall planningo f instruments such as PARPA, andthe process o f preparingthe Medium-Term Fiscal Scenario. This, inturn, will facilitate decision-making processesfor adjustment or expansion (advancement or postponement o f programs/projects), in the light o f the behavior of resourceconstraints, andfacilitate more rational andefficient use o fresources. Deconcentration and decentralization o f State actions, particularly inthe public planning system, i s another vital element. A process is ongoing to strengthen and expand local participatory planning, in the framework o fthe State administrative andfinancial decentralization process (see section 111.1(e)). The effort to improvethe planningandbudgetary system, mentionedinthe three previous paragraphs, should be approached in a systematic and responsible manner, paying special attention to the necessaryhumancapacity. 2. Monitoringandevaluationprocedures. The government is aware o f the need to involve all its partners inthe PARPA monitoring process. In that context, during the fourth quarter o f 2002, the six monthly consolidated PARPA monitoring and evaluation report and other short-term instruments, namely the ESP and SB, together with other relevant documents from partners, will be analyzed by the Poverty Observatory (OP). This forum brings together government bodies; civil society organizations, including representatives from religious faiths; business leaders, labor unions and non-governmental organizations, among others; along with intemational cooperation partners. There are also weaknesses to be overcome inmonitoring, since the informationmade available by the sectors on the degree o f fulfillment of targets and activities in PARPA fundamental areas do not always reflect the realsituation on the ground. This recommendation also applies to cases where sectors objectively inform about the degree of execution o f actions and targets, but omit to mention the factors that are decisive for fulfillment or otherwise. Reports often lack a qualitative assessment o f the results and effects generated by the actions undertaken-for example in the case o f courses and other training programs, where the number o ftrainees is reportedwithout presenting datato evaluate the actions implemented.  - 45 - To strengthen implementation o f the PARPA monitoring process, the sectors involved need to gain more effective ownership o fthe process. A start can be made on this by evaluating performance at the intra-sectoral level, since it is essential for data to be collected, processed and analyzed within the sector itself before beingsubmitted to the MPF. This is most important when the formal channels for transmitting data and information from sectors and other agents do not achieve satisfactory results, andit becomesnecessaryto complement the informationreceivedwithsectoral visits andother forms o finteractive work. In addition, the present monitoring system covers too many activities and has failed to provide a detailed analysis o f the efficiency and efficacy o f sectoral performance. Experience suggests that monitoringa small number o f concrete quantitative indicators, representative o f performance ineach area, tends to be more flexible and productive. This is an aspect to take into consideration infuture planningcycles. The process o f monitoring PARPA implementation, during 2001 and the first half o f 2002, also kindled an internal debate in several sectors concerning the extent to which activities matched the established objectives, and on the information capacity o f the chosen indicators. Such debates should certainly leadto improvements inthe planningprocess. The finalconclusion i s that a future review o f PARPA should draw on the mainlessons learned from experience of its implementationandmonitoring thus far, especially at the sectoral level. 3. Achievement of physical and financialtargets and other programmedactions As regards integrationof PARPA intonormal sectoral operations, there seems to be relatively limited knowledge o f the Plan among technical and even senior staff with responsibilities for implementing policies. Sectoral ownership o f PARPA therefore needs to be strengthened at all levels: planning, implementationandmonitoring. Generally speaking, physical and financial indicators are moving in the right direction. Social indicators are replicating their previous trend, although coverage i s not be sufficient to encompass all populationsegmentsandregions o f the country. Specifically, the education, health, good governance, legality andjustice sectors are all performing well. Interms o f implementation, sectors are currently prioritizing access to public services, to the detriment o f quality; it is therefore essential to strengthen the efficiency andefficacy of public-service provision. As regards financial indicators, expenditure inpriority sectors as a percentage o f total expenditure excluding debt interest, has been rising inline with PARPA indicators. The revised State Budget for 2002 anticipates that this ratio will surpass the 66.1% PARPA target. Given prevailing revenue constraints, channeling additionalresources into the priority sectors would undermine performance in other sectors, which despite not been priorities are nonetheless important for the country's development. In this context, increasing efficiency becomes a maximum priority in public expenditure management. The needremains also to redouble efforts to improve the geographic distributiono fexpenditure, since provincial participation remains limited inthe light o f the government's intention to move faster in the administrative decentralization and deconcentration process. This is particularly germane to overcomingthe major imbalances inpoverty indices across provinces andregions. Inview ofthe extent ofthe HIViAIDS pandemic inMozambique, consideration needsto be given to the study entitled HWSIDA, Capital Humano e Perspectiva de Crescimento Econdmico de Mocambique, which is currently being finalized inthe framework o f MPFAFPFU cooperation. Some  - 46 - of the results of this study will be o f major sectoral and macroeconomic interest when calculating estimates of economic growthandpublic resourcesandexpenditure inPARPAframework.