Government priorities for speeding up economic growth and reducing
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1 Government priorities for speeding up economic growth and reducing poverty, Ministry of Planning and Development Seminar organized by the government of Mozambique, the World Bank, and the IMF Namaacha, March 22, 2010
2 Outline 1. Assumptions 2. Government priorities for speeding up economic growth and reducing poverty 2.1. The government's five-year program, Infrastructures 2
3 Development models: 1 Assumptions (1/3) The model for attaining the Millennium Development Goals remains valid Broader Washington Consensus Investment in human capital (education, health) and in basic infrastructures; Improvement of governance and public security; Rural development Economic growth and job creation need to be stimulated Larger volume of public and private investments Reduction of urban poverty 3
4 (2/3) Agriculture Plan of action for food production is the way to achieve food selfsufficiency Financing The current trend in domestic and external funding levels for the state budget will be maintained over the next five years There is potential to increase funding: Revenues from the exploitation of natural resources, including minerals; nonconcessional credit. 4
5 The rationale of change (3/3) Mozambique has pursued the Millennium Development Goals by: Investing a larger volume of domestic public resources Using external financing, grants, and concessional credit Faster economic growth is needed to improve citizens standard of living: Promoting job creation Implementing and attracting a larger volume of public and private investments The government will make use of nonconcessional credit to complement financing for public projects, in regard to their economically and socially viable component 5
6 2. Government priorities for speeding up economic growth and reducing poverty 6
7 2.1. Objectives of the government's five-year program, Central objective Combat poverty and improve living standards General objectives Consolidate national unity, peace, and democracy Combat poverty and promote a culture of work Promote good governance, decentralization, the fight against corruption, and a culture of accountability Strengthen sovereignty Strengthen cooperation 7
8 Combating poverty and promoting a culture of work Human and social development Education (primary education: MDG; quality; technical-vocational education) Health (mother-child health: MDG) Youth (employment and housing) Water and sanitation Housing (a particularly important issue) 8
9 Combating poverty and promoting a culture of work Economic development Macroeconomic management, planning (... reduction of urban poverty) Promotion of investments (acceleration of growth) Agriculture,... (green revolution; mapping) Mineral resources (gas, coal, hydrocarbons; EITI) Infrastructures (specific categories: roads, bridges, dams, energy production and transport) Tourism (comparative advantage) Work (increased productivity) it 9
10 Good governance, decentralization, a combating corruption and promoting a culture of accountability Public sector reform Decentralization (continuation and consolidation) Justice reform (... and expansion) Order and security Communications media 10
11 Crosscutting issues Mine clearing Environment Reducing the impact of vulnerability HIV/AIDS Gender Food security and nutrition (new) Rural development (new, crosscutting) 11
12 Examples Infrastructures Promote private sector participation in the construction, management, and maintenance of roads and bridges, focusing particularly on the following roads: Beira Machipanda Maputo - Ponta D Ouro, including construction of the Maputo - Catembe Bridge Cuchamano Tete Zóbue Stretches of the N1 national highway Construction of the fourth bridge over the Zambeze river in the city of Tete 12
13 Promote construction of the : Mphanda Nkuwa hydroelectric plant, phase I (1,500 MW); Cahora Bassa Norte hydroelectric plant (1,245 MW); Moatize thermal power plant, phase I (600 MW); Benga thermal power plant, phase I (500 MW); Moamba natural-gas-fired thermoelectric power plant (600 MW); Promote construction of the Tete-Maputo power transmission line (a project of decisive importance) 13
14 2.2.2 Implications of using nonconcessional credit Basic requirement: Maintain macroeconomic stability Risks Investment in nonviable projects Unsustainable borrowing Preconditions Use of nonconcessional credit is a last resort Feasibility study for each candidate project Monitoring: Coordination between the Ministry of Finance, Ministry of Planning and Development, Banco de Moçambique, and sectors Effective public debt management unit Monitoring in the preparation, construction, and operation phases
15 Thank You. 15
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