Southern African Regional Poverty Network (SARPN) SARPN thematic photo
Country analysis > Mozambique Last update: 2019-06-25  
leftnavspacer
Search





 Related documents


Independent Evaluation Office, International Monetary Fund
Operations Evaluation Department, World Bank


Republic of Mozambique: Evaluation of the PRSP process and arrangements under the PRGF

Process and Arrangements Under the Poverty Reduction and Growth Facility (PRGF)

July 6, 2004

SARPN acknowledges the World Bank website as the source of this document.
This case study was prepared jointly by the independent evaluation units of the World Bank and IMF, as background to separate but complementary evaluation reports available at www.worldbank.org/oed/prsp and www.imf.org/ieo.
The other country case studies conducted in support of these evaluations are also available on-line at the above addresses.
[Download complete version - 493Kb ~ 3 min (98 pages)]     [ Share with a friend  ]

Executive summary

Overview

In Mozambique, poverty reduction as a key objective of government policy predates the introduction of the PRSP approach by the IMF and the World Bank. PARPA— Mozambique’s PRSP—drew heavily on existing sectoral policies and programs, but it also put more firmly on the public agenda issues related to participation in domestic policy processes (including the role of parliament and political parties), and has brought greater attention to implementation constraints through a focus on monitoring results. It has become the common point of reference on poverty reduction policies within government—across line ministries and between central and provincial levels of government—and for dialogue between the government, other national stakeholders, and international development partners.

The principal objective in the PARPA is reduction in the incidence of poverty from 70 percent in 1997 to less than 60 percent in 2005, and to less than 50 percent by 2010. Six priority, and 11 complementary, areas are identified to promote human development and create a favorable environment for rapid, inclusive and broad-based growth. The priority areas are: (i) education; (ii) health; (iii) agriculture and rural development; (iv) basic infrastructure; (v) governance; and (vi) macroeconomic and financial policies.

Application of underlying principles

The PRSP approach has proved to be relevant to Mozambique, and the underlying principles have been applied to varying degrees in the PARPA process. Initially, the authorities resented what they saw as an additional externally-driven procedural requirement. Overall, however, the process has been country-driven with strong government ownership. A draft of the PARPA was subjected to a consultation process that involved the participation of business associations, labor unions, religious bodies, nongovernmental organizations, media, central and provincial government institutions and donors. Even though the consultation process had its shortcomings—for example, representatives of civil society organizations have pointed to insufficient time for preparation (e.g., materials were distributed late, and there was insufficient time for CSOs to consult members at grassroot levels)—the consultations did lead to significant changes to the draft, most notably the inclusion of good governance as one of the “fundamental priority” areas. However, after approval by the government, little has been done to disseminate PARPA (including preparing popular versions in main local languages); it is largely unknown in any detail outside Maputo and provincial capitals.

The PARPA process is partnership-oriented and builds on existing mechanisms for government-donor relations. The PARPA process was launched at a time when there was broad consensus between government and donors on key priorities for poverty reduction. Most of the sector policies around which PARPA was built had been developed by the government in close cooperation with donors. This relatively harmonious process reflected the fact that Mozambique already had a comparatively well developed donor coordination mechanism. A number of Sector Wide Approaches (SWAps)—including in health and agriculture—have existed since the mid-1990s. Also, several donors in Mozambique were coordinating their balance of payments support prior to the PARPA process.

The PARPA recognizes the multi-dimensional nature of poverty and adopts a comprehensive approach to poverty reduction. It employs a wide range of indicators for measuring poverty; e.g., in addition to income- and consumption-based indicators, it also used available data on illiteracy, mortality and water access rates, and drew on the results of a qualitative participatory poverty assessment. Reflecting its broad definition of poverty, the PARPA adopts a comprehensive approach to poverty reduction that includes broad-based growth in a framework of macro-economic stability, actions to enable market-based rural development, and social service delivery. Although it provides a good description of regional differences of poverty incidence, it does not provide provincial- and district-level targets. There is a need for greater clarity on how national average targets relate to provincial and district priorities.

The PARPA is based on a long-term perspective, but its operational framework is appropriately medium-term oriented. The medium-term nature of PARPA is underlined by two additional factors: government intention to link future versions of PARPA to the election cycle (specifically, the economic program presented to parliament by a newly elected government), and ongoing work towards defining a “Vision 2025.”

The PARPA is results-oriented, but institutional weaknesses pose a challenge for translating plans into action. The operational targets are largely taken from sectoral plans, and vary considerably in scope and precision: some are set at the output level (e.g., enrolment rates in primary education), others are input-oriented (e.g., curriculum reform, teacher training), while others are set on intermediate outcomes (e.g., mortality rates). In a few areas, targets were not yet specified (e.g., anti-corruption).

Implementation, monitoring, and preliminary results

Integration of PARPA into the government’s planning, budgeting and reporting processes is underway but at a slow pace. The annually updated five-year medium-term budget framework (MTBF) is the principal instrument for translating the public expenditure priorities in PARPA into budgetary allocations. Weaknesses in Mozambique’s public expenditure management system need to be addressed to ensure that budgeted funds are available to spending units and that the funds are spent as budgeted. Quality control (i.e., ensuring quality of spending) and monitoring and reporting functions in government also need to be enhanced. Senior officials emphasized to the evaluation team that procedures for monitoring and reporting on progress in implementation should be oriented around the strengthening of domestic processes, rather than fulfilling BWI procedural requirements. In this regard, the recent merging of the annual PRSP process report and the review of the 2003 Economic and Social Plan (submitted to Parliament) is an important step forward.

A high level forum—the Poverty Observatory—has been established to bring together the government, a broad range of national stakeholders and Mozambique’s international development partners to review PARPA implementation on an annual basis. The focus is intended to be on drawing lessons from experience and coming up with recommendations for improving implementation and monitoring.

Evidence on progress towards meeting PARPA targets and objectives is mixed, with significant progress in some areas (e.g., education and health), and less progress in others (e.g., agriculture). But in most areas, there is uncertainty about the extent to which progress is being made in improving quality of service delivery. These uncertainties reflect system weaknesses in budget execution, monitoring and reporting, and are being addressed as part of the reforms of the public expenditure management system.

Enhancing capacity

There is a wide range of ongoing reforms in the public sector aimed at addressing capacity weaknesses related to implementation and monitoring of the PARPA. Although these reforms are meant to address capacity constraints, they appear to be taxing current capacity to the limit. At the same time, different levels of government (i.e., central, provincial and district) are putting great stock in these reforms—especially aspects dealing with decentralization of the planning and monitoring system—to improve the implementation of government policies and programs.

The PARPA process seems to have enhanced policy discussions on poverty issues within the government (especially between central and provincial government officials), and to a lesser extent, between the government and non-government stakeholders. However, a broad range of those met by the evaluation team stressed the need to strengthen policy analysis capacity in and outside government for a more meaningful and sustainable participatory process.

IMF effectiveness

Reflecting the wishes of the authorities, IMF staff did not participate directly in the preparation of the PARPA. In particular, there was no IMF staff participation in the government-led consultations with stakeholders.

When the ESAF was transformed to the PRGF in 1999, this was supposed to signal a new way of doing business for the IMF. In particular a number of “key features” were supposed to distinguish PRGF-supported programs from those supported under the ESAF: (i) broad participation and greater country ownership; (ii) embedding the program in an overall strategy for growth and poverty reduction; (iii) government budgets that are more pro-poor and pro-growth; (iv) appropriate flexibility in fiscal targets; (v) more selective structural conditionality; (vi) emphasis on measures to improve public resource management and accountability; and (vii) social impact analysis of major macroeconomic adjustment and structural reforms.

The evaluation’s findings on the application of the “key features” in Mozambique’s PRGFsupported programs are as follows:

  • Participation in the formulation and monitoring of IMF-supported programs has remained narrow, but there is some indication of greater country ownership of the program.
  • The macroeconomic framework of the pre-existing PRGF-supported program influenced the PARPA’s macroeconomic framework, but the PRGF objectives have become broadly aligned to PARPA goals.
  • The PRGF emphasizes poverty reduction interventions (e.g., pro-poor, and progrowth government budgets) and measures to improve public resource management and accountability (in line with PARPA objectives on good governance).
  • The envisaged fiscal stance in programs continues to reflect an “objective” of significant reduction in aid dependence over a relatively short time horizon, but in reality, programs have become more flexible in dealing with aid inflows.
  • There has been significant streamlining in structural conditionality under the PRGFsupported program. In practice this has meant transferring responsibility for areas vacated by the IMF to the World Bank. Thus, “streamlining” has been interpreted by the staff in terms of the division of labor with the World Bank rather than reducing the burden of aggregate conditionality on the country.
  • Not much has happened with respect to undertaking social impact analysis of major macroeconomic adjustment and structural reforms. One exception was PSIA of a proposed fuel tax increase, where the policy decision was postponed until the assessment was completed.
There was little public discussion of the macroeconomic policy content of the PARPA, and more generally, there continues to be little public discussion of macroeconomic policy issues. Broader participation would be facilitated by the establishment of a government-led macroeconomic working group open to representatives from all stakeholder groups. The IMF can contribute towards broadening participation in the discussion of macroeconomic policies in the country by facilitating wider dissemination and discussion of the analytical work that forms the basis for its policy recommendations, including the work of TA missions.

Feedback from the authorities and donors on the role of IMF resident representatives was very positive. However, CSOs indicated that the IMF was invisible to them reflecting its low profile outside official circles. The office of the IMF resident representative needs strengthening to be able to effectively play all the roles expected of it.

World Bank effectiveness

The Bank supported PARPA formulation the way the government wanted, with appropriate support without being intrusive. Preparation of the PARPA was strongly country-driven, with the Bank providing comprehensive informal and formal comments as well as offering relevant analytical inputs. There was also considerable work by the Bank preceding the PARPA process that authorities drew from, including development of sector-wide approaches, a Country Economic Memorandum, the participatory activities conducted in preparation of the 2001 CAS, and preparation of a Public Expenditure Management Review starting in September 2000 that was recognized by government as aiding the costing of sector strategies. The end product of the formulation phase was clearly country-owned, with several areas of continued differing viewpoints between the Bank and government. These included the scope of the strategy, which the Bank feared was too broad, too sector focused, and included public policies which were not core to poverty reduction. On specific issues, Bank staff wanted more focus on the quality of primary education, a stronger separate focus on HIV/AIDS, and changes to the land rights regime.

The government expressed satisfaction with its relations with the Bank, with discussions now more linked to the realities of Mozambique. The Bank has broadened its contacts with civil society actors, including the business community, with relations with these stakeholders also notably improved. It is important to note, however, these assessments did not relate the perceived change to the advent of the PARPA process per se, but to a broader improvement over the past five years. Some of this improvement was noted to be a result of the significant decentralization of Bank staff including the country director to Maputo. Donors expressed a more ambivalent opinion of their relations with the Bank, painting a mixed picture of the quality of sectoral dialogue. On the one hand, the Bank is perceived to be more participative and sensitive to other donors, by seeking dialogue and participation in joint donor groups (e.g., agriculture). On the other hand, the Bank is still seen as too driven by Washingtonbased task managers who occasionally overrule country office staff who participate in regular donor working group meetings (e.g., the social sectors and infrastructure).

The evaluation’s findings on the alignment of the Bank’s work with the PARPA initiative include:

  • Bank lending and non-lending assistance since the PARPA have largely been in line with its priorities. Significant adjustments have been made to the analytical work program, in line with government priorities, including work on decentralization as well as shifts to procurement and financial accountability analyses in line with furthering the governance objectives of the PARPA. However, activities dropped or delayed have resulted in gaps in the Bank’s support for building on important pieces of the PARPA strategy, most notably the critical rural development area.
  • A new CAS was discussed by the Bank’s Board in November 2003, and the planned assistance is broadly aligned with the PARPA. In addition, the results framework of the CAS is linked to PARPA and PAF goals.
  • The Bank intends to move with other donors towards providing assistance through budget support linked directly to the PRSP, via a Poverty Reduction Support Credit (PRSC), in spite of cautionary signals from its own analytical work regarding the use of government procedures and systems. Fiduciary risks may be partially offset by linking the PRSC directly to performance indicators related to progress in enhancing public expenditure management capacity (and targets in PARPA). While risky, the move to budget support the signals a strong vote of confidence in the ability of Mozambique to implement the PARPA agenda. Preliminary planning for the PRSC has involved discussions with the G-11 group of donors. This new direction, in conjunction with decentralization by the Bank of key staff to the field, has provided the framework for improved coordination with other external partners.
  • The Bank’s experience with the PARPA process has implications for the way the Bank operates. First, a qualified local presence of the Bank in key strategic areas is highly appreciated by government, national stakeholders and other donors. It is also a sine qua non for continuous participation in policy dialogue processes, which are becoming less dependent on timing priorities of donors and more linked to domestic needs and events. Second, Bank presence can be of special importance not only as an additional voice among many, but also as a voice that may have a balancing, unifying or if needed mediating function in the donor community. Third, the ability of the Bank to play this role is closely linked to the ability to deliver timely and high quality analytical and advisory inputs. It is important that the Bank ensure adequate resources to provide knowledge services.


IMF-World Bank collaboration

The JSAs for Mozambique have been candid in their assessments; they have pointed out strengths and areas of significant improvement without glossing over weaknesses. However, they have tended to understate the challenges to implementation posed by capacity weaknesses. In terms of their role in providing a road map for future improvements, the JSAs have contained suggestions of areas in need of improvement, and the full PRSP (PARPA) did respond to many of the issues highlighted in the JSA of the I-PRSP. The JSAs do not seem to have contributed much to enhancing partnership; donors saw it as geared almost exclusively to the Executive Boards of the IMF and the World Bank. A number of donors would like to participate in the assessment rather than merely provide input to Bank and Fund staff.

Problems associated with the production of the first PARPA progress report reflected weaknesses in monitoring and reporting arrangements, but also raised important issues of temporal alignment between government processes and requirements of external development partners (including the IMF, the World Bank). Assisting the authorities to strengthen the analytical content of the national reporting instruments that are subject to parliament scrutiny would enhance the prospect for closer alignment.

The transfer of responsibility from the IMF to the World Bank for structural conditionality in areas that the Bank is expected to take the lead in has been facilitated by the existence of Bank adjustment lending. During periods when there has been no such Bank instrument in place, the PRGF has provided the main vehicle for exercising conditionality by the BWIs (e.g., banking sector conditionality during most of 2000-2002).



Octoplus Information Solutions Top of page | Home | Contact SARPN | Disclaimer