VZCZCXRO6458
RR RUEHDU RUEHJO RUEHMR
DE RUEHTO #0566/01 1361505
ZNR UUUUU ZZH
R 161505Z MAY 06
FM AMEMBASSY MAPUTO
TO RUEHC/SECSTATE WASHDC 5385
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHLMC/MILLENNIUM CHALLENGE CORP  0041
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 MAPUTO 000566 
 
SIPDIS 
 
SIPDIS 
 
AF/S FOR HTREGER AND JMALONEY 
JOHANNESBURG FSC FOR RDONOVAN 
JOHANNESBURG TDA FOR DSHUSTER 
USDOC FOR RTELCHIN 
MCC FOR SGAULL 
USAID FOR AA/AFR AND AFR/SA 
 
E.O. 12958: N/A 
TAGS: ECON EAID EINV ETRD MZ
SUBJECT: Mozambique: April Economic Digest 
 
 
MAPUTO 00000566  001.2 OF 002 
 
 
¶1. This is a brief summary of significant economic 
developments in Mozambique during April 2006.  We provide it 
as a supplement to our other reporting.  The items discussed 
are: 
 
-- IMF Completes 4th PGRF Review Mission 
 
-- GRM and Donors Conclude Joint Review 
 
-- Mozambique/South Africa Cooperation in Agriculture 
 
-- KFW Grants 12 Million Euros for Tertiary Roads 
 
-- Mozambique's National Social Security Institute to 
   Restructure 
 
-- Maputo Concessionaire Adds New Shareholder 
 
 
IMF Completes 4th PRGF Review Mission 
------------------------------------- 
 
¶2.  In early April the IMF presented the result of its 4th 
review mission under Mozambique's current Poverty Reduction 
and Growth Facility (PRGF) arrangement.  The IMF's overall 
assessment was positive.  The IMF considers Mozambique's 
2005 economic performance generally good, the fiscal 
outcomes better than previous years and is happy with 
monetary policy benchmarks.  One benchmark concern was with 
decentralization - the IMF feels that a timetable with 
future steps needs to be developed.  Another was progress on 
public sector reform, where the IMF concluded there must be 
a move from strategy and planning to actual action.  GDP 
growth is predicted to be 7.9 percent in 2006 and thereafter 
at 7 percent.  The current PRGF arrangement expires in July 
¶2007.  The IMF currently anticipates that Mozambique will 
graduate to another arrangement, the Policy Support 
Instrument (PSI), upon expiration of the current PRGF.  In 
the region, Uganda already has a PSI and Tanzania is also 
moving in that direction. 
 
GRM and Donors Conclude Joint Review 
------------------------------------ 
 
¶3. On April 13 the GRM and the 18 donors who supply money 
directly to the budget concluded a 45-day long joint review 
of the government's performance in 2005, judging the 
performance as positive, according to press reports.  Budget 
support donors so far have promised approximately USD 300 
million in support for 2006.  Outgoing chairperson of the 
donor group, Swedish Ambassador Maj Inger Klingvall said 
that as a result of the positive assessment, the donors 
would be recommending continued budget support in 2007.  But 
she noted that donors were disappointed that the government 
failed to reach a number of 45 jointly agreed targets, 
particularly in the area of good governance.  Here, eight of 
13 targets were missed, including ones on public sector 
reform and fighting corruption.  Despite stressing "strong 
political will" at the top, she claimed "implementing 
machinery has not taken off." 
 
Mozambique/South African Cooperation in Agriculture 
--------------------------------------------- ------ 
 
¶4.  On April 12, at a joint press conference in Maputo, 
Mozambique and South Africa's Ministers of Agriculture 
announced a new bilateral cooperation agreement in 
agricultural training and research.  According to 
Mozambique's Agricultural Minister, Tomas Mandlate, 
Mozambicans technicians will be sent to South Africa to 
learn how to mechanize agriculture at low cost.  Meanwhile a 
pilot program on low cost mechanization is to be started in 
Moamba district of Maputo province by the end of the month, 
he added.  Cooperation will also include work on electronic 
registration of livestock. 
 
 
KFW Grants 12 Million Euros for Tertiary Roads 
--------------------------------------------- -- 
 
¶5.  KFW, the German development bank, granted 12 million 
Euros for the building and maintenance of 277 kilometers of 
 
MAPUTO 00000566  002.2 OF 002 
 
 
tertiary roads in the southern Mozambican province of 
Inhambane.  The Mozambique Road Fund will contribute an 
additional USD 2.4 million.  The undertaking, to build 
tertiary road and create a system for ongoing maintenance, 
is predicted to start this fall and take approximately 18 
months. 
 
Mozambique's National Social Security Institute to 
Restructure 
--------------------------------------------- ------- 
 
¶6.  Armando Muiuane, Chairman of Mozambique's National 
Social Security Institute (INSS), stated on April 6 that the 
INSS intends to complete a full economic and financial 
assessment of all of its assets.  This assessment is part of 
a restructuring already underway.  Labor Minister Helena 
Taipo appointed Muiuane as part of a shake-up of the 
Institute last August, with his predecessor dismissed over 
corruption allegations.  Restructuring priorities include 
modernization and use of computers, as well as collection of 
outstanding debts owed by companies. 
 
Maputo Concessionaire Adds New Shareholder 
------------------------------------------ 
 
¶7.  The South African shipping company, Grindrod, recently 
joined as a shareholder in the Maputo Port Development 
Company (MPDC).  MPDC currently holds a 15-year concession 
to operate the Port of Maputo.  Grindrod purchased 12.24 
percent of the consortium.  A remaining 38.76% is held 
additional foreign investors and 49% by Mozambique's rail 
and port parastatal, CFM, and private Mozambique investors. 
 
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