Mozambique Country Report ANNEXES - FANRPAN...• Public-service performance incentives are strengthened, so that policies are made and implemented, audit and procurement systems work,

JOINT EVALUATION OF GENERAL BUDGET SUPPORT 1994–2004 Burkina Faso, Malawi, Mozambique, Nicaragua, Rwanda, Uganda, Vietnam

Mozambique Country Report

ANNEXES

April 2006

General Budget Support in Mozambique

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Joint Evaluation of General Budget Support MOZAMBIQUE COUNTRY REPORT ANNEXES

Contents

ANNEX 1: APPROACH AND METHODS 165 Annex 1A: Summary of the Evaluation Methodology 165 Annex 1B: Approach and Methods in Mozambique 173

Introduction 173 Team and Timetable 173 Research Methods 174 Applying the Evaluation Framework 175 Reflections 176

Annex 1C: Interviewees 177

ANNEX 2: COUNTRY BACKGROUND 181 Annex 2A: Chronology of Development and Aid Relationships 181 Annex 2B: Millennium Development Goal Profile for Mozambique 183

ANNEX 3: AID TO MOZAMBIQUE 185 Annex 3A: Mozambique Inventory – GBS and related programmes 186 Annex 3B: PGBS Flows 195

Commentary on data 195 Annex 3C: The Design of PGBS in Mozambique 199

Introduction 199 The origin of PGBS 199 The first framework agreement 200 The 2002 crisis 200 The 2004 Memorandum of Understanding 200 The evolution of the mechanisms of dialogue 202

Annex 3D: Additional Donor Information 215 Annex 3E: Technical Assistance Received by the Ministry of Planning and Finance 1995–2004 219

ANNEX 4: PUBLIC FINANCE MANAGEMENT 223 Annex 4A: Status and Trends in Public Finance Management 223

Introduction 223 Overview of PFM in Mozambique 224 Overview of high-level PFM outcomes and concerns 225 Aid and PFM 229 Sources 230

Annex 4B: The Off-Budget Issue 247

ANNEX 5: SUMMARY OF CAUSALITY FINDINGS 249

ANNEX 6: SURVEY OF SEVEN CIVIL SOCIETY ORGANISATIONS 255 Introduction 255

ANNEX 7: PERFORMANCE ASSESSMENT FRAMEWORK 2005 259 Figures

Figure 1A.1: The Enhanced Evaluation Framework (schematic view) 166 Figure 1A.2: Causality Map for the Enhanced Evaluation Framework 169 Figure 5.1: Key to the Causality Map 250


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Boxes Box 1A.1: General Definition of Budget Support and GBS 165 Box 1A.2: The DAC Evaluation Criteria 165 Box 1A.3: Enhanced Evaluation Framework – Logical Sequence of Effects 167 Box 1A.4: Key Evaluation Questions 170 Box 3D.1: Bilateral and Multilateral Donors in Mozambique 215 Box 3D.2: Donor Involvement in Different Aid Modalities 216 Box 6.1: The Questionnaire 255 Box 6.2: The Questionnaire Results 256

Tables

Table 3B.1 Summary of PGBS Flows 196 Table 3B.2: GBS and Related Commitments by Donor 1996–2005 (USD million) 197 Table 3C.1: GBS/PRSC/PRGF Recommendations, Structural Conditionalities and Benchmarks, and Prior Actions over Time 205 Table 3D.3: Official Development Assistance 217 Table 4A.1: PEFA PFM Performance Measurement Indicators for Mozambique 232 Table 5.1: Causality Map – Summary of Causality Findings in Mozambique 251


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ANNEX 1: APPROACH AND METHODS

Annex 1A: Summary of the Evaluation Methodology 1. This Annex provides a short summary of the evaluation methodology. For full details please refer to the Inception Report (IDD & Associates 2005) (see also the Note on Approach and Methods which accompanies the Synthesis Report). Box 1A.1 shows how General Budget Support (GBS) relates to other forms of programme aid, while Box 1A.2 defines the Development Assistance Committee (DAC) evaluation criteria. Figure 1A.1 provides an overview of the Enhanced Evaluation Framework (EEF).

Box 1A.1: General Definition of Budget Support and GBS As defined for the purpose of this evaluation, programme aid can be divided into food aid and financial programme aid. Financial programme aid includes both budget support and balance of payments support (such as debt relief and import support). Budget support in turn can be divided into sector budget support (SBS) and general budget support (GBS).

Programme Aid

Financial Programme Aid Food Programme Aid

Budget Support * Balance ofPayments Support

General Budget Support (GBS)

Sector Budget Support Debt ReliefImport Support

*Referred to as direct budget support in the Evaluation Framework The general characteristics of budget support are that it is channelled directly to partner governments using their own allocation, procurement and accounting systems, and that it is not linked to specific project activities. All types of budget support include a lump-sum transfer of foreign exchange; differences then arise on the extent of earmarking and on the levels and focus of the policy dialogue and conditionality. Sector Budget Support is distinguished from General Budget Support by being earmarked to a discrete sector or sectors, with any conditionality relating to these sectors. Additional sector reporting may augment normal government accounting, although the means of disbursement is also based on government procedures. Source: IDD & Associaes 2005: Box 2.1.

Box 1A.2: The DAC Evaluation Criteria The five DAC evaluation criteria are:

• Effectiveness: The extent to which the development intervention’s objectives were achieved, or are expected to be achieved, taking into account their relative importance.

• Efficiency: A measure of how economically resources/inputs (funds, expertise, time, etc.) are converted into results.

• Relevance: The extent to which the objectives of a development intervention are consistent with beneficiaries’ requirements, country needs, global priorities and partners’ and donors’ policies.

• Impact: Positive and negative, primary and secondary long-term effects produced by a development intervention, directly or indirectly, intended or unintended.

• Sustainability: The continuation of benefits from a development intervention after major development assistance has been completed. The probability of continued long-term benefits. The resilience to risk of the net benefit flows over time.

Source: IDD & Associates 2005: Box 3.1.

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Annex 1A: Summary of the Evaluation Methodology

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2. Box 1A.3 shows, for each level of the logical framework, the main effects that are hypothesised to result from GBS. These hypothesised effects form the first column (the "logical sequence") of the detailed evaluation questions which are annexed to the Inception Report.1

Box 1A.3: Enhanced Evaluation Framework – Logical Sequence of Effects Level 1 (the design) 1. Adequate quantity and quality of inputs are provided by new GBS:

1.1 Funds 1.2 Policy dialogue 1.3 Conditionality 1.4 TA/capacity building linked to

• Public finance management (PFM) • Pro-poor sectoral policies and good governance

1.5 Alignment and harmonisation • International Partners’ (IP's) alignment to government goals and system • IPs’ harmonisation

Level 2 (the immediate effects/activities) 2.1 More external resources for the government budget (additionality) 2.2 Proportion of external funds subject to national budget process increased (increased fungibility)2.3 Increase in predictability of external funding of national budget 2.4 Policy dialogue and conditionalities focused on pro-poor policy framework and improved PFM 2.5 TA/capacity building established to:

• improve PFM processes including budgeting, accounting, financial control, audit • improve the linkage between PFM and pro-poor sectoral policies and good governance

2.6 Actions to ensure IPs’ alignment are in place Actions and agreements to improve IPs’ harmonisation are in place

Level 3 (the outputs) 3.1 Increased resources for service delivery:

• External resources are treated as additional • Cost of funding budget deficit reduced

3.2 Partner government is encouraged and empowered to strengthen PFM and government systems:• To use the budget to bring public sector programmes into line with government goals, systems and

cycles (Poverty Reduction Strategy Paper/Medium Term Expenditure Framework) • To set up performance monitoring systems to measure the effectiveness of public expenditure at the

level of the final beneficiaries • To promote alignment and harmonisation by IPs

3.3 Partner government is encouraged and empowered to strengthen pro-poor policies: • To establish and execute an adequate sequence of reforms to ensure macroeconomic stability and

private sector development • To establish and execute pro-poor policies and targeting in health, education, agricultural and rural

development • To enhance social inclusion policies, through decentralisation and participation of the civil society, reform

of the administration of justice and respect for human rights 3.4 Improved aggregate fiscal discipline:

• More predictable funding flows • Incidence of liquidity shortfalls reduced, hence less use of Central Bank overdrafts and less

accumulation of arrears 3.5 Operational efficiency of public expenditure is enhanced:

• By reductions in certain types of transaction costs to partner government (e.g., non-standard procurement systems, brain-drain effects of parallel project management structures)

• Better planning, execution and oversight reduces wasteful spending, controls corruption better, spreads positive lessons across the public sector

1 See IDD & Associates 2005 Annex G for the full set of detailed evaluation questions.


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3.6 Allocative efficiency of public expenditure is enhanced: • By a more effective budget process: multi-year, results oriented, transparent, participatory; with effective

execution and audit; with an adequate tracking system • By increased capture of project funds in budget • By stakeholders taking the domestic budget more seriously (because that’s where the money is)

3.7 Intra-government incentives and capacities are strengthened: • Official reporting lines are more respected (vertical through government to cabinet, not horizontal to IPs)• Public-service performance incentives are strengthened, so that policies are made and implemented,

audit and procurement systems work, and corruption is reduced 3.8 Democratic accountability is enhanced:

• Greater role of parliament in monitoring budget results • Accountability through domestic institutions for IP-financed spending is enhanced • Conditions for all-round democratisation are thereby improved, including the trust of people in their

government and hence their level of expectations Level 4 (the outcomes)

4.1 Macroeconomic environment is favourable to private investment and growth: • Inflation controlled • Realistic exchange rate attained • Fiscal deficit and level of domestic borrowing sustainable and not crowding out private investment

4.2 Regulation of private initiative works to ensure business confidence, equity, efficiency and sustainability: • Policies on corruption, property rights resolutely pursued • Market-friendly institutions developed

4.3 More resources flowing to service delivery agencies 4.4 Appropriate sector policies include public actions to address major market failures, including those

arising from gender inequalities 4.5 More effective and accountable government improves administration of justice and respect for

human rights, as well as general confidence of people in government 4.6 More conducive growth enhancing environment 4.7 Public services effectively delivered and pro-poor:

• Service delivery targets met for key pro-poor services • Evidence of increased use of services by poor (including poor women)

Level 5 (the impact) 5.1 Income poverty reduction 5.2 Non-income poverty reduction 5.3 Empowerment and social inclusion of poor people

3. The main hypothesised links between inputs and subsequent effects at different levels are depicted on the causality map (Figure 1A.2). Note that these are not the only possible links; the evaluation teams also considered whether other links appeared important in particular countries.

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4. A set of over-arching key Evaluation Questions (Box 1A.4) provides an organising framework for the country evaluation and a structure for the country reports.2

Box 1A.4: Key Evaluation Questions 1. How does the evolving Partnership GBS (PGBS) design respond to the specific conditions, strengths and

weaknesses of the country, to government priorities and to the priorities and principles of the international partners?

2. Has PGBS contributed to greater harmonisation and alignment of the aid process? 3. How efficient, effective and sustainable has been the contribution of PGBS to the performance of the public

expenditure process? 4. How efficient, effective and sustainable has been the contribution of PGBS to improving government

ownership, planning and management capacity, and accountability of the budgetary process? 5. How efficient, effective and sustainable has been the contribution of PGBS to improving public policy

processes and policies? 6. How efficient, effective and sustainable has been the contribution of PGBS to macroeconomic performance? 7. How efficient, effective and sustainable has been the contribution of PGBS to improving government

performance in public service delivery? 8. How far has PGBS strengthened government impact on poverty? 9. Is the PGBS process itself sustainable? 5. Under each main evaluation question, a series of sub-questions (evaluation criteria) are posed (the shaded boxes within each of the chapters in Part B of the main report). To facilitate comparisons and consistency across the countries studied, symbols are used to give approximate ratings for the general situation and for the influence PGBS is judged to have had. The key to the ratings and symbols is as follows:

(a) Where the logic of the (implicit) question requires it – i.e. in Chapters B2–B83 – the ratings distinguish between the general situation to which the question refers and the influence of PGBS upon it. For the general situation, the rating is expressed as a level and a trend.

(b) PGBS influence is expressed in two ratings: � For effect. This assesses the difference that PGBS makes to the general

situation. � For efficiency: It is perfectly possible that PGBS will be found to have a weak or

null effect not because PGBS is inherently ineffective, but because it is relatively small ("a drop in a bucket") vis-à-vis the general situation. "Efficiency" therefore assesses whether PGBS has a significant effect relative to the resources deployed via PGBS. (Roughly, has PGBS been a "value for money" way of pursuing this effect?)

(c) For both the general situation and the PGBS influence, a separate confidence rating is given.

(d) The same symbols are used against "level", "effect", "efficiency" and "confidence" ratings:

*** strong/high ** medium/moderate * low/weak

2 See Inception Report Annex K for the full matrix of key Evaluation Questions, including judgement criteria, evidence, data sources, counterfactuals. The final Note on Approach and Methods will note minor amendments and assess the experience of using the Enhanced Evaluation Framework. 3 The Evaluation Criteria in Chapters B1 and B9 refer directly to PGBS itself, so there is no separate "general effect" to consider.

Annex 1A: Summary of the Evaluation Methodology

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null the level/effect is either zero or negligible nf [not found] we found no evidence either way na rating is Not Applicable to this question

(e) The "trend" is the trend at the end of the evaluation period, and the options are: + increasing/improving = stable (or no discernible trend) – declining/worsening na not applicable if the accompanying level is rated null / not found /

not applicable

(f) In the few cases where perverse effects are identified (a negative effect when the question implies a positive one is expected), this is shown as "perverse" (and is always be highlighted in the text explanation).

(g) As a rough guide to confidence ratings: *** strong/high confidence:

We're sure what evidence is needed to answer this question, and the evidence we have appears robust and conclusive (so we would be surprised if more evidence changed the rating).

** medium/moderate confidence There is some uncertainty whether the evidence we have is both robust and sufficient; more evidence might lead to a somewhat different rating.

* low/weak confidence: There is uncertainty about what evidence is relevant to the question, and/or the evidence we have is limited or unreliable.

(h) The ratings for "general situation" and "PGBS influence" may be based on different (though overlapping) sets of evidence; it is perfectly possible that confidence levels will differ, so they are rated separately.

(i) As a rough guide to ratings for effect *** strong effect:

PGBS has made a definite and very significant difference to the general situation; it is not necessarily the only factor which has made such a difference, but it is an important one.

** moderate effect: PGBS has made a definite and moderately significant difference to the general situation; but it may be a subsidiary factor, or one among a considerable number of significant factors.

* low/weak effect: PGBS has made only a small difference to the general situation.

null PGBS is assessed to have made no difference, or only a negligible difference, to the general situation.

nf [not found] We did not find evidence either way of a PGBS effect. na The implied question is Not Applicable in this case.


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(j) As a rough guide to ratings for efficiency: *** highly efficient

PGBS exerts a strong influence towards the effect in question, in proportion to the resources embodied in PGBS.

** moderately efficient PGBS exerts a moderate influence towards the effect in question, in proportion to the resources embodied in PGBS.

* low efficiency PGBS exerts only a weak influence towards the effect in question, in proportion to the resources embodied in PGBS.

null PGBS is assessed to have exerted no influence, or only a negligible influence, towards the effect in question.

not found We did not find evidence either way of a PGBS influence. na The implied question is Not Applicable in this case.

6. The evidence used to assess ratings is explained in the text, and it follows general guidelines in Annexes G and K of the Inception Report (IDD & Associates 2005). The ratings have been checked for broad consistency across the country studies. At the same time, the study team recognises their limitations. It is neither possible nor desirable to reduce qualitative issues entirely to quantitative judgements. The ratings are only an adjunct to the text.


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Annex 1B: Approach and Methods in Mozambique

Introduction 1. This annex describes and comments on the approach and methods for the study in Mozambique. Its purpose is to describe how the Mozambique country team applied the conceptual framework outlined in Chapter A1 and the general methodology applied by all teams as described in Annex 1A.

Team and Timetable 2. The Mozambique study was based on two field visits, a two-week inception period in October 2004, and a three-week study in May 2005. The purpose of the inception period was to undertake scoping studies of the partnership among and between government and international partners; the institutions of policy-making, budgeting, sector coordination, and service delivery; public expenditure management; the macroeconomy; and poverty reduction. The purpose of the second study was to focus on answering the Evaluation Framework questions agreed with the Management Group for this Joint Evaluation of General Budget Support. These questions are set out in detail in Annex K of the Inception Report, listed in Annex 1A Box 1A.4, and highlighted in Chapters B1–B9 of the Mozambique country report. 3. The study team on the first visit consisted of:

• Richard Batley – Team Leader, International Development Department (IDD), School of Public Policy, University of Birmingham, UK

• Amélia Cumbi – national consultant • Albert de Groot and Corina Certan – Ecorys Research and Consulting, The

Netherlands 4. For the second visit, the team was:

• Richard Batley • Liv Bjørnestad – Mokoro Ltd, UK • Amélia Cumbi

5. All but Corina Certan had previously worked in Mozambique on questions related to GBS. The team changed partly for reasons of availability but also because it was particularly important for the second visit that all team members spoke Portuguese, so as to be able to undertake more detailed studies.

6. The chair of the “Troika” that led the Programme Aid Partnership was the co-ordinating IP – first the Head of Cooperation of Switzerland and then of Sweden. They chaired an in-country steering group of programme aid partners (PAPs). The chair was supported by the PAP Secretariat. The government contact point was the Director of Planning and Budget in the Ministry of Planning and Finance (MPF). 7. An Interim Report was submitted in December 2004 outlining the preliminary findings of the visit. Following the second visit a Draft Country Report was submitted to the Steering Group in September 2005. Comments were received over the following six weeks, and the final country report was prepared in December 2005.


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Research Methods 8. In the first visit, extensive interviews were undertaken with the IPs and the Government of Mozambique (GOM), and the team also participated in several meetings of the PAPs and their working groups. In the case of government, the focus was on the “core institutions” with regard to budgeting and financial management, mainly in the MPF but also in the planning departments of the Ministries of Education, Ministry of Health and Ministry of Agriculture. Many of these interviews were undertaken by the evaluation team operating together, because the sources of information were common although we each had our separate analytic focuses. In the second visit, the team more often divided to pursue interviews separately. 9. The list of 120 interviewees (65 national and 55 donor representatives) indicates the scale of the work in arranging and conducting interviews in such an elaborate case as that of Mozambique. We made a systematic effort to interview all IPs, non-governmental organisations (NGOs), parliamentary and GOM officials who had a relationship with the PGBS process. The representation of NGOs and political representatives is relatively weak, but this reflects the level of their participation in PGBS. 10. For the second visit in May 2005, the timetable was as follows:

– Week one: team meetings to assess material available from documents and information needs; interviews with MPF and IPs; participation in Joint Review approval of Aide Mémoire.

– Week two: interviews with line ministries, United Nations Development Programme (UNDP), United Nations Capital Development Fund (UNCDF) and NGOs; meeting with PGBS Economists Group; interviews and meetings in Nampula Province; interviews with MPF, central bank and International Monetary Fund (IMF).

– Week three: accompanied by Management Group representative (Alexandra Chambel Figueiredo), interviews with MPF, line ministries, IPs, parliament; meeting with Gender Working Group; and the debriefing and feedback workshop.

11. We benefited from contact with Richard Gerster (Gerster Consulting) who, apart from his previous work for the PAPs and the GOM, was undertaking a concurrent review of the Performance Assessment Framework (PAF) in Mozambique. We were also fortunate to have access to the recently published book by Anthony Hodges and Roberto Tibana on the political economy of the budget in Mozambique. 12. Team members drew on the material they found appropriate for their subject, sharing their knowledge of what was most useful. In general, we found that most of the directly relevant literature focused on the organisation of aid and PGBS in Mozambique, and on the reform of the governmental system. At the other end of the spectrum, there is also some material on the economic and social status of the country and on the incidence of poverty. There is much less on the processes linking the two except, for example, the Hodges and Tibana book. We therefore focused our effort on understanding the relation between, on the one hand, modalities of aid, practices and reforms in government and, on the other hand, outcome and end-impacts. 13. During the inception phase of the project a questionnaire was sent to all donors asking them to outline the aid instruments they had used over the study period with details of commitments and disbursements. The response to this was low, with only four questionnaires returned out of about 30, despite follow-up on the questionnaire by the local consultant over a number of months. As a result it was not possible to use the questionnaires to provide financial data on GBS by donor.

Annex 1B: Approach and Methods in Mozambique

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14. Preparations for both visits were made by the country team leader and the national consultant. The latter has extensive contacts among IPs and in government, having worked for both and having acted as a consultant on related themes. Most recently she has undertaken a study of the “off-budget” issue in the health sector. The focal points of the study in Mozambique were the National Director of Planning and Budgeting of MPF, and the “Troika” of three donors who led the Programme Aid Partnership (first UK, Switzerland and Sweden, and on the second visit Switzerland, Sweden and the Netherlands). The study team was also supported by the PAP Secretariat. The team benefited greatly from their goodwill and openness. While the national consultant led in the organisation of the team's programme of interviews and workshops, she relied on the willing collaboration of donors, government officials and NGOs. 15. The team participated in Joint Review and working group meetings between donors and government. Briefing and debriefing workshops were held at the beginning and end of each of the two visits. However, participation in these was rather small – about 25 at each event – although they were advertised through the PAP Secretariat. Such meetings raise less enthusiasm in Mozambique than in some other countries, precisely because of the intensity of the dialogue between government and donors. Neither is keen on attending unnecessary meetings. Indeed, the GOM had appealed to its IPs for a “quiet period” following the April/May Joint Review, coinciding with our visit in May 2005. 16. We sought a “bottom-up” perspective on the causes of poverty reduction in Mozambique and their possible derivation from processes associated with PGBS. In other words, in addition to “tracing down” from PGBS inputs through their immediate effects to outputs and finally outcomes and impacts, we also tried to do a backward check on causality, so as to identify other causal factors. In principle, this is an important counterweight to the determinism implicit in tracing causal effects downwards. However, scope to achieve this was limited – given the time that had to be dedicated to understanding the processes occurring between donors and government. With more time, much more could have been achieved. However, the bottom-up view was the focus of:

• interviews with NGOs; • our own brief survey of the experience of service delivery at provincial level (see

Chapter B7), undertaken with the collaboration of the Grupo Moçambicano da Dívida;

• our visit to one province (Nampula) and a district (Rebáuè) where, apart from local officials, we met health workers and NGOs specialising in health and education.

Applying the Evaluation Framework 17. The five analytic areas of the first study visit were focused in practice on a limited number of key evaluation questions for each analysis, derived from the GBS Evaluation Framework. These provided the structure of the country inception report produced in December 2004. As a result of the lessons learned from the first-phase country studies, and the response of the Management and Steering Groups to the first draft Inception Report in January 2005, the Evaluation Framework was refined and enhanced in preparation for the second set of country studies that took place between May and July 2005. A hypothesised common causality framework was developed on the basis of which a detailed logical framework of questions and sub-questions was worked out. This was synthesised in a set of key evaluation questions, judgement criteria, relevant evidence and possible sources that were agreed between the country teams. A common report structure for all country teams was also developed. 18. In practice, in Mozambique, it was found necessary to reduce these frameworks and guidance notes to a unified document that could easily be operationalised by the country team.


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The fact is that, once in the field, it is much easier to ensure a common approach between team members and to ensure that the ground is covered if there is a single, simple research protocol. We achieved this for the second visit by preparing one document based on the report structure and under each chapter heading setting out (a) the principal evaluation question and causality chain, (b) what we already knew from the previous visit and from available literature and (c) what we needed to know. We then divided principal responsibility for each chapter between the three team members. 19. This approach generally worked well, though the range of issues to be covered was immense and the time short. The two visits complemented each other inasmuch as the first one helped us to understand the broad dynamics of the development of aid and GBS in the context of Mozambique's development during the period 1994–2004. This provided a background on the basis of which we could identify our focus and contacts for the second visit. The period between the visits allowed some time to read background material while also contributing to the revision of the Inception Report and Evaluation Framework. 20. Interview notes were written up and exchanged between team members during and after the study visits. It was difficult to keep up with the pace of interviewing and the acquisition and reading of documentation during the period of study, so much also depended on discussion and exchange between team members during the study visits. The analysis of interview material and documentation occurred very largely during the process of writing, and this led to the exchange of drafts and corrections throughout June and July 2005.

Reflections 21. There is a massive amount of documentation on aid policy in Mozambique. This is in danger of becoming an over-studied case. Fortunately, our national consultant knew her way around the material and was able to collect, collate and distribute documentation among team members in preparation for both the first and second visits. We selected key documents (see Bibliography) on the basis of her guidance, each team member’s professional judgement and the advice of our contacts in government and among donors. However, there may well be omissions in our grasp of everything that has been reported earlier. 22. In government and among IPs we met kind and helpful attention. However, as indicated in the previous paragraph, there was a widespread feeling that we were yet another among many overlapping evaluation teams. This led to the understandable and gracious refusal of the IPs to complete the PGBS evaluation's own questionnaire on their objectives, volume and distribution of aid. Except for a few (France, Ireland, Japan and Portugal), they appealed to “questionnaire fatigue”, and left us to assemble our own data from existing materials. Similarly, as indicated above, there was not widespread enthusiasm in government or among donors for attending workshops on our interim findings. Perhaps most fundamentally, there was nobody in government who really saw themselves as a focal point for the study. This may indicate the case for some donor/government planning of jointly agreed evaluations. 23. The study team faced a massive range of evaluation questions on the relations between government and IPs, the internal functioning of government, its relation with line agencies and provinces, its accountability to parliament and civil society, and the impact on people and the economy. We had to cover this in two very brief visits to gather material and undertake interviews, and in back-up documentary searches. We did our best but in so doing went well beyond our paid-for time. Such studies need resources to match the scale of the exercise.


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Annex 1C: Interviewees Government and advisers • José Sulemane, National Director of Plan and Budget, Ministry of Planning and Finance • Pedro Couto, Gabinete de Estudos, Ministry of Planning and Finance • Robert James, ODI Fellow, Ministry of Planning and Finance • Tony Hodges, Technical Assistance, Ministry of Planning and Finance • Carlos Jessen, UTRAFE, Ministry of Planning and Finance • Mauro Fridman, Technical Assistance (SISTAFE), Ministry of Planning and Finance • António Laice, DNT, Ministry of Planning and Finance • Carolina Nguenha, DNCP, Ministry of Planning and Finance • Eugénio Paulo, Technical Assistance, Ministry of Planning and Finance • Xavier Modol, Technical Assistance, DNCP, Ministry of Health • José Jaime Macuane, UTRESP • Jorge Marcelino, IGF, Ministry of Planning and Finance • Vitorino Xavier, Coordinator of Institutional Reform, PROAGRI, Ministry of Agriculture and

Rural Development • Rogéria C. Muianga, Director of Administration and Finance, Ministry of Agriculture and

Rural Development • Channing Arndt, Technical Assistant, Ministry of Planning and Finance • Hélder Gany, DNPC, Ministry of Education • Manuel Rego, Planning National Director, Ministry of Education • Adriano Chamusso, Ministry of Agriculture • Xavier Cirera, ODI fellow, Ministry of Industry and Commerce • Andrea Alfieri, ODI fellow, GPSCAINA, Ministry of Agriculture • Enrique Blanco Armas, technical adviser, FOPOS, Ministry of Planning and Finance • John Gray, technical adviser, FOPOS, MPF • Hermínio Sueia, Director, Customs • Abdul C. J. Zacarias, Economist, Central Bank of Mozambique • Alberto Herculano Manjate, Assistant to the Director, Central Bank of Mozambique Nampula Province and advisers Provincial Finances and Planning Directorate • Arnaldo Wazir, Deputy Provincial Planning Director • Tomás A. Nhane, Deputy Provincial Budget Director • Massuhate Zacarias, Head of the Planning Unit • Rachide Mimo, Contabilidade Pública • Julião Carlos, Treasury • Aniceteo Rapieque, Revenue Control • Iván A. Vásquez, (District Planning) – Technical Assistance UNDP • Dário Passo, (District Planning) – Technical Assistance UNDP


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Provincial Health Directorate • Flávio, Provincial Health Director • Paulo Rapaz, Head of the Planning Unit • António Amisse, Director do CHAEM • Latifo Salimo Fajar, Human Resources • Júlio Alberto da Silva, Finances • Teresa Jaime Malhaule, Nampula City Health Director • Marcelino Vasco, Head of the Training Unit • Aissa Faquira Ali, Head of the Finances and Management Unit Provincial Education Directorate • Francisco Teodósio Nogueira, Head of the Planning Unit • Francisco Armando José, Head of the Finances and Management Unit • Adolfo Mendes Barrote, Head of the Human Resources Unit • Ermelinda Eduardo M. Xavier, Finances Ribáuè District • Chale Ossufo, District Administrator • Ricardo Lima, District Culture Director • Fernando D. Muthete, Clinician – District Health Directorate • Romeu Arlindo Dale, Head of the Human Resources Unit, District Education Directorate • Celestino S. da Conceição Dimas, Head of the Finances Unit, District Education

Directorate • Elísio J. Juarte, District Agriculture Director Non-Government • Virgínia Videira, Parliament, Head of Commission on the Budget • Kenneth Gunn, Director PODE • Kenneth Robson, Consultant • Carlos Oya, Consultant • Roberto Tibana, Analítica • Egas Mussanhane, Director, CTA • Jim la Fleur (Private Sector) CTA • Eufrigina dos Reis Manuela, Grupo Moçambicano da Divida • Silvestre Baessa Júnior, Grupo Moçambicano da Divida • Sara Issufo, UDEBA Institute – NGO on Education in Nampula • Avelino H. Lopes, CONCERN – NGO on Education in Nampula • Sérgio Cambuile, Rede Osuwela – NGO on Education in Nampula • Andy Kalala, Kulima – NGO on Education in Nampula • Barbosa Morais, Teacher at the Catholic University and G20 Nampula

Annex 1C: Interviewees

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International Partners • Éamon Cassidy, Head of DFID, Central Africa • Simon Vanden Broeke, Economist, DFID • Paul Wafer, Education and Health Adviser, DFID • Anton Johnston, Head of Cooperation, Embassy of Sweden • Carin Anderson, Economist Group, Embassy of Sweden • Lis Rossenholm, Economist Group, Denmark • Nina Berg, Denmark • António Franco, World Bank • Jolke Oppewal, Economist, Netherlands • Adrian Hadorn, Head of Mission, Switzerland Cooperation • Telma Loforte, Manager of Economic Programmes, Swiss Cooperation • Julius Schlotthauer, USAID • Gilberto [surname?] (Private Sector), World Bank • Ishiro Muto, Japan Embassy • Kenji Ohira, Japan Embassy • Carlos Santos, Auditing Unit for Provincial Common Fund, Swiss Cooperation • Cipriano Godinho, Auditing Unit for Provincial Common Fund, Swiss Cooperation • Lars Ekman, First Secretary, Royal Norwegian Embassy • Mette Masst, Minister Counsellor, Royal Norwegian Embassy • Sylvie Millot, Economist Group, European Commission (EC) • Ronald Meyer, Head of Cooperation, Germany Embassy • Perry Perone, IMF • Carsten Sandhop, Economist Group, Germany Embassy • Caroline Rickatson, Governance Adviser, DFID • Bridget Walker, Development Cooperation of Ireland • Keith Grimstock, Head of Cooperation, Development Cooperation of Ireland • Louis Robert, Head of Mission, Canada • Andrea Cilloni, Economist, Italian Cooperation • Federica Anfosso, Italian Cooperation • Sissel Idland, First Secretary, The Norway Embassy • Sam Bickersteth, Deputy Head DFID • Ivo German, SECO • Cristina Pucarinho, Head of Mission, Portugal Embassy • Françoise Desmazierès, Head of Cooperation, France Embassy • Marylène Spezzati, Resident Representative UNDP • Israel Jacob Massuanganhe, UNDP • Cyril Guillot, Deputy Director UNCDF • Ronald McGill, UNCDF • Petra Lantz, Representative, UNFPA • Roger Dhliwayo, Economist, Swiss Development Cooperation • Juan Pita, Spanish Cooperation


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• Carlos Botella, Spanish Cooperation • Jan Willem le Grand, Netherlands Embassy • Guido Larch, Italian Embassy • Olli Sotomaa, Head of Cooperation, Finland Embassy • Kirsi Visainen, Health adviser, Finland • Wim Ullens, Belgian Cooperation • Nora Laet, Head of Cooperation, Belgium • Julie Riviere, GTZ (Education) • Gregor Binckert, Lead Specialist Macroeconomics, World Bank • José Macamo, Public Sector Economist, World Bank • Margriet M. Koelman, Policy Officer, Netherlands Ministry • Marcia Colquhoun, Gender specialist, Canada • Leontina dos Muchangos, Gender specialist, Canada


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ANNEX 2: COUNTRY BACKGROUND

Annex 2A: Chronology of Development and Aid Relationships

Overview 1975 • Independence. 1977–1982 • Centrally planned economy adopted.

• The Rhodesian Central Intelligence Organisation creates the Mozambique National Resistance (MNR) (to become later RENAMO); beginning of the destabilisation war.

• Arrival of western European and Eastern block expatriates. Financial inflow, with credits obtained from East and West countries.

• Major drought hits southern Mozambique. • USSR rejects Mozambique’s membership of Comecon. FRELIMO (the Mozambique

Liberation Front) reorients to the West and South Africa; initial moves towards market-oriented economy.

1983–1987 • Economic crisis and worsening of the war; social and economic infrastructure (health and education facilities, and bridges) become military targets.

• USA agrees to drop its ban on bilateral aid. • Change to market-oriented approach. The country is admitted to IMF and World Bank (WB). • Government conceived structural adjustment programme launched without previous IMF

approval. • Donor dependence increases: aid agencies and NGOs pour in and take the lead. • First initiatives in donor coordination. Establishment of coordinating national body (DPCCN) for

emergency and food aid. Donor coordination with designation of sectoral focal donors (Sweden: education, Switzerland: health).

1990–1993 • Swiss cooperation provides earmarked budget support covering recurrent health expenditures.

• Mozambique is declared the world’s poorest country and the most aid-dependent. • The progressive removal of price subsidies induces strikes and protests. • Sector budget support funded by Swiss Cooperation is introduced. • A new multi-party democratic constitution is adopted. • IMF approves Enhanced Structural Adjustment Facility (ESAF) with tighter restrictions. • General peace agreement with political, financial, logistical and TA support mainly from USA,

UK, France, Italy, Portugal and UN. 1994–1998 • First multi-party elections.

• Serious flooding displaced over 200,000 people. • Progressive normalisation, economic recovery. • IMF demands further cuts in subsidies and social services. • FRELIMO objects to IMF demands. A joint government and donor statement criticising IMF is

issued. 1995–2001 • Banking crisis: WB in 1995 and the IMF in 1996 condition aid on privatisation of two state-

owned banks. Both banks collapsed. Fraud and bad loans were involved. Two murders occurred, of a prominent journalist in 2000 and a central bank official in 2001.

• Heavily Indebted Poor Countries (HIPC) debt relief agreed in 1996 • Official Development Assistance (ODA) inflows increase from USD 933m in 2001 to

USD 2,330m in 2002. 1999–2002 • Second multi-party national elections.

• Joint donor reviews in 1998 and 1999 lead to proposal to coordinate budget support. • Early 2000: devastating floods in the south and centre.

2004 • Mozambique qualifies for Millennium Challenge funds. • New national constitution. • Third multi-party national elections.


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Aid relationships Various factors have shaped the modalities and instruments used to channel aid in different periods. National policies, policies choices within the donor countries, and international fashions have influenced greatly the pattern of aid flows.

• Independence (1975–82): In accordance with the national policy, aid flowed chiefly from the eastern block and Nordic countries in the form of TA and import support aimed at financing development projects. However, there was also an important flow of skilled professionals from all over the world.

• War and drought (1983–86): Emergency food aid. • Economic collapse (1987–90): The shift to the market-oriented economy with the

introduction of the Structural Adjustment Programme (SAP) was followed by a doubling of food aid from 1985 to 1987. Balance of payments (BOP) support and import support (IS) both became important aid modalities, accounting for up to 26% of total aid inflows in 1990 (Abrahamsson and Nilsson 1994). There is an increasing presence of donors, NGOs, bilaterals and multilaterals; international NGOs increased from 7 in 1980 to 70 in 1985 and 180 in 1990; national NGOs went up from 4 in 1984 to 200 in 1996. Earmarked Swiss budget support begins.

• Preparation for peace (1991–95): Emergency and food aid dropped off sharply between 1993 and 1994. BOP support and IS continued. However, the rehabilitation projects to replace destroyed infrastructure induced increased investment flows. Increased role of multilateral donors, UN playing a crucial role in coordination of donor support to the reconstruction programmes, much of which was channelled through international NGOs. In 1992, 40% of food aid was channelled through the DPCCN and 60% through NGOs. In 1994, these proportions changed to 20% through the government and 80% the NGOs.

• Normalisation of life (1996–2000): Gradual decrease in the roles of multilateral agencies and NGOs. While the bilateral contribution to ODA increased more than twofold from 1998 to 2002, multilateral contribution has remained at the same level. This period was also marked by growing donor participation in financing recurrent expenditure, and an increased attention to provinces, leading to geographic concentrations: Danish International Development Agency (Danida) in Tete, Finnish aid in Manica, Irish aid in Niassa and Inhambane, the Netherlands in Nampula, and the EC in Zambézia. An important evolution was the shift from project aid to sector aid, establishing pools to support sectors as a whole.

• Strengthening the core government processes (2000–): The “new General Budget Support” is introduced in 2000.


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Annex 2B: Millennium Development Goal Profile for Mozambique

1990 1995 2001 2002

1 Eradicate extreme poverty and hunger 2015 target = halve 1990 $-a-day poverty and malnutrition rates

Population below $1 a day (%) .. 37.9 .. ..

Poverty gap at $1 a day (%) .. 12.0 .. ..

Percentage share of income or consumption held by poorest 20% .. 6.5 .. ..

Prevalence of child malnutrition (% of children under 5) .. 27.0 .. ..

Population below minimum level of dietary energy consumption (%) 69.0 62.0 53.0 ..

2 Achieve universal primary education 2015 target = net enrolment to 100 Net primary enrolment ratio (% of relevant age group) 46.8 39.8 59.7 ..

Percentage of cohort reaching grade 5 (%) 32.9 46.3 51.9 ..

Youth literacy rate (% ages 15–24) 48.8 54.7 61.7 62.8

3 Promote gender equality 2005 target = education ratio to 100 Ratio of girls to boys in primary and secondary education (%) 72.9 70.4 77.3 ..

Ratio of young literate females to males (% ages 15-24) 47.9 54.7 62.9 64.3

Share of women employed in the non-agricultural sector (%) 15.2 .. .. ..

Proportion of seats held by women in national parliament (%) .. 25.0 .. ..

4 Reduce child mortality 2015 target = reduce 1990 under-5 mortality by two-thirds

Under-5 mortality rate (per 1,000) 240.0 221.0 208.0 205.0

Infant mortality rate (per 1,000 live births) 150.0 139.0 130.0 128.0

Immunisation, measles (% of children under 12 months) 59.0 71.0 58.0 58.0

5 Improve maternal health 2015 target = reduce 1990 maternal mortality by three-quarters

Maternal mortality ratio (modelled estimate, per 100,000 live births) .. .. 1,000.0 ..

Births attended by skilled health staff (% of total) .. 44.2 .. ..

6 Combat HIV/AIDS, malaria and other diseases 2015 target = halt, and begin to reverse, AIDS, etc.

Prevalence of HIV, female (% ages 15–24) .. .. 14.7 ..

Contraceptive prevalence rate (% of women ages 15–49) .. 5.6 .. ..

Number of children orphaned by HIV/AIDS .. .. 420.0 thousand ..

Incidence of tuberculosis (per 100,000 people) .. .. 265.0 436.4

Tuberculosis cases detected under DOTS[spell out first – is it direct observation therapy systems?] (%)

.. 53.0 68.0 45.2

7 Ensure environmental sustainability 2015 target = various (see notes) Forest area (% of total land area) 39.8 .. 39.0 ..

Nationally protected areas (% of total land area) .. 6.1 6.1 8.4

Gross Domestic Product (GDP) per unit of energy 1.0 1.5 2.4 ..


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1990 1995 2001 2002

use (PPP[spell out first] $ per kg oil equivalent) CO2 emissions (metric tons per capita) 0.1 0.1 0.1 ..

Access to an improved water source (% of population) .. .. 57.0 ..

Access to improved sanitation (% of population) .. .. 43.0 ..

Access to secure tenure (% of population) .. .. .. ..

8 Develop a Global Partnership for Development 2015 target = various (see notes)

Youth unemployment rate (% of total labour force ages 15–24) .. .. .. ..

Fixed line and mobile telephones (per 1,000 people) 3.4 4.0 13.7 18.6

Personal computers (per 1,000 people) .. 1.0 4.0 4.5

General indicators Population 14.2

million 15.8

million 18.1

million 18.4

million Gross national income – GNI ($) 2.3 billion 2.2 billion 3.6 billion 3.6 billion

GNI per capita ($) 170.0 140.0 200.0 200.0

Adult literacy rate (% of people ages 15 and over) 33.5 38.5 45.2 46.5

Total fertility rate (births per woman) 6.3 5.6 5.1 5.0

Life expectancy at birth (years) 43.4 44.6 42.4 41.1

Aid (% of GNI) 43.2 49.9 29.8 60.4

External debt (% of GNI) 200.4 349.7 142.1 135.2

Investment (% of GDP) 15.6 22.8 41.5 44.7

Trade (% of GDP) 44.2 55.1 57.2 61.7

Note: In some cases the data are for earlier or later years than those stated Goal 1 targets: Halve, between 1990 and 2015, the proportion of people whose income is less than one dollar a day. Halve, between 1990 and 2015, the proportion of people who suffer from hunger. Goal 2 target: Ensure that, by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling. Goal 3 target: Eliminate gender disparity in primary and secondary education preferably by 2005 and to all levels of education no later than 2015. Goal 4 target: Reduce by two-thirds, between 1990 and 2015, the under-five mortality rate. Goal 5 target: Reduce by three-quarters, between 1990 and 2015, the maternal mortality ratio. Goal 6 targets: Have halted by 2015, and begun to reverse, the spread of HIV/AIDS. Have halted by 2015, and begun to reverse, the incidence of malaria and other major diseases. Goal 7 targets: Integrate the principles of sustainable development into country policies and programmes and reverse the loss of environmental resources. Halve, by 2015, the proportion of people without sustainable access to safe drinking water. By 2020, to have achieved a significant improvement in the lives of at least 100 million slum dwellers. Goal 8 targets: Develop further an open, rule-based, predictable, non-discriminatory trading and financial system. Address the Special Needs of the Least Developed Countries. Address the Special Needs of landlocked countries and small island developing states. Deal comprehensively with the debt problems of developing countries through national and international measures in order to make debt sustainable in the long term. In cooperation with developing countries, develop and implement strategies for decent and productive work for youth. In cooperation with pharmaceutical companies, provide access to affordable, essential drugs in developing countries. In cooperation with the private sector, make available the benefits of new technologies, especially information and communications. Source: World Development Indicators database, April 2004


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ANNEX 3: AID TO MOZAMBIQUE

Contents

Annex 3A: Mozambique Inventory – GBS and related programmes Annex 3B: PGBS Flows Annex 3C: The Design of PGBS in Mozambique Annex 3D: Additional Donor Information Annex 3E: Technical Assistance received by the Ministry of Planning and Finance 1995–2004

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UN

and

IM

F.

In a

Mem

oran

dum

of U

nder

stan

ding

(MO

U) i

n 20

04, G

OM

and

PA

Ps

com

mitt

ed th

emse

lves

to

the

over

all o

bjec

tive

of c

ontri

butin

g to

pov

erty

re

duct

ion

by s

uppo

rting

the

Pove

rty R

educ

tion

Stra

tegy

Pap

er (

PR

SP

; PA

RPA

in

Moz

ambi

que)

. Int

erm

edia

te o

bjec

tives

wer

e to

su

ppor

t pov

erty

redu

ctio

n by

: a)

bui

ldin

g a

partn

ersh

ip b

ased

on

frank

and

op

en d

ialo

gue;

b)

pro

vidi

ng fi

nanc

ing

to th

e pu

blic

sec

tor f

or

pove

rty re

duct

ion,

link

ed to

per

form

ance

. A

s un

derly

ing

prin

cipl

es G

OM

agr

eed

to p

eace

, de

moc

ratic

pol

itica

l pro

cess

es, i

ndep

ende

nce

of th

e ju

dici

ary,

rule

of l

aw, h

uman

righ

ts, g

ood

gove

rnan

ce a

nd p

robi

ty in

pub

lic li

fe, i

nclu

ding

th

e fig

ht a

gain

st c

orru

ptio

n, p

ublic

exp

endi

ture

co

nsis

tent

with

PA

RP

A p

riorit

ies,

and

sou

nd

mac

roec

onom

ic p

olic

ies.

The

first

cas

es o

f for

mal

don

or

harm

onis

atio

n w

ere

in h

ealth

: a

pool

to fu

nd o

vers

eas

hosp

ital

doct

ors

in 1

996,

and

a d

rug

pool

in

199

7. In

199

9 Ire

land

and

N

orw

ay jo

ined

the

Sw

iss

in

earm

arke

d bu

dget

sup

port

to th

e he

alth

sec

tor,

esta

blis

hing

the

Fund

o C

omum

Pro

vinc

ial (

FCP

); fu

ndin

g w

as a

bout

US

D 3

.3m

in

2002

. Poo

led

dono

r fun

ding

to

the

MO

H is

bei

ng b

roug

ht fu

lly

on-b

udge

t thr

ough

PR

OS

AU

DE

(h

ealth

SW

Ap) a

s fro

m 2

004.

Th

e fir

st s

ecto

r-le

vel p

rogr

amm

e of

bud

get s

uppo

rt w

as

deve

lope

d in

199

8 fo

r the

M

inA

g; a

bout

US

D 2

00m

ove

r fiv

e ye

ars

was

ear

mar

ked

for

agric

ultu

re, p

aid

into

a B

ank

of

Moz

ambi

que

(BO

M) a

ccou

nt

and

disb

urse

d to

the

Min

istry

. Th

is a

rran

gem

ent w

as

form

alis

ed fi

rst i

n an

MO

U in

19

99, r

enew

ed in

200

1 an

d 20

05. T

he s

econ

d M

OU

was

fo

rmat

ive

in e

stab

lishi

ng th

e pr

inci

ples

for o

ther

sec

tor-

wid

e ap

proa

ches

in th

e he

alth

and

ed

ucat

ion

(FA

SE

) sec

tors

.

Mem

bers

of t

he J

oint

Don

or

Pro

gram

me

prov

ide

inst

itutio

nal s

uppo

rt in

the

area

s of

: mac

roec

onom

ic

man

agem

ent c

oord

inat

ed w

ith

the

IMF;

impl

emen

tatio

n of

pr

iorit

y pr

ogra

mm

es u

nder

the

PA

RP

A; p

lann

ing

and

budg

etin

g in

stru

men

ts;

mon

itorin

g an

d ev

alua

tion

of

the

PA

RP

A; a

nd p

ublic

fina

nce

man

agem

ent.

Muc

h m

ore

tech

nica

l as

sist

ance

has

focu

sed

on li

ne

min

istri

es th

an o

n th

e de

velo

pmen

t of t

he p

lann

ing

and

finan

cial

cap

acity

.

Moz

ambi

que

was

the

reci

pien

t of

subs

tant

ial a

mou

nts

of B

OP

su

ppor

t bef

ore

and

afte

r the

in

itiat

ion

of s

truct

ural

refo

rms.

A

s th

e ec

onom

y w

as li

bera

lised

, do

nors

repl

aced

spe

cific

impo

rt su

ppor

t with

deb

t rel

ief a

nd B

OP

su

ppor

t to

mee

t the

gen

eral

gap

in

exte

rnal

pay

men

ts.

With

the

mov

e to

a m

arke

t-de

term

ined

exc

hang

e ra

te, B

OP

su

ppor

t, in

its

turn

, bec

ame

inap

prop

riate

sin

ce th

e ex

chan

ge

rate

wou

ld n

ow o

pera

te a

s th

e ul

timat

e ba

lanc

ing

mec

hani

sm.

How

ever

, the

IMF'

s P

over

ty

Red

uctio

n an

d G

row

th F

acilit

y (P

RG

F) p

lays

an

impo

rtant

role

in

the

over

all s

yste

m o

f bud

get

supp

ort.

The

PR

GF

is s

uppo

sed

to d

iffer

from

its

Enha

nced

S

truct

ural

Adj

ustm

ent F

acilit

y (E

SA

F) p

rede

cess

or in

that

po

verty

redu

ctio

n be

com

es a

pr

ime

cons

ider

atio

n in

mac

ro

polic

y ra

ther

than

a b

y-pr

oduc

t of

a st

able

and

ena

blin

g m

acro

en

viro

nmen

t.

Ann

ex 3

A: M

ozam

biqu

e In

vent

ory

– G

BS

and

rela

ted

prog

ram

mes

(187

)

Type

s →

G

ener

al B

udge

t Sup

port

Ea

rmar

ked

BS

TA fo

r GB

S or

PFM

B

OP

Supp

ort

3.

Alig

nmen

t with

N

atio

nal

Stra

tegi

es

Is/w

as th

e pr

ogra

mm

e al

igne

d w

ith a

par

ticul

ar

natio

nal s

trate

gy (e

.g. t

he

PR

SP

)?

GB

S is

alig

ned

with

PA

RP

A (s

ee a

bove

). Th

e P

AR

PA

und

erlie

s al

l pla

nnin

g do

cum

ents

but

th

e do

nor-

GO

M c

olla

bora

tion

now

uni

tes

on a

m

ore

spec

ific

set o

f sha

red

targ

ets,

set

out

in a

P

erfo

rman

ce A

sses

smen

t Fra

mew

ork

(PA

F).

Pro

gres

s is

mea

sure

d ag

ains

t the

PA

F ea

ch

year

and

form

s th

e ba

sis

of P

AP

s’

com

mitm

ents

. Th

e ec

onom

ic a

nd s

ocia

l pla

n (P

ES

) and

the

stat

e bu

dget

are

com

pose

d by

the

MP

F an

nual

ly fr

om m

inis

teria

l con

tribu

tions

and

up

datin

g. In

prin

cipl

e, th

is p

roce

ss d

epen

ds o

n in

form

ed d

ialo

gue

betw

een

MP

F an

d th

e m

inis

tries

. In

prac

tice,

as

was

repe

ated

to u

s in

in

terv

iew

s w

ith b

oth

dono

rs a

nd g

over

nmen

t, th

e tw

o si

des

have

lack

ed th

e m

utua

l ex

perie

nce

and

unde

rsta

ndin

g th

at w

ould

allo

w

them

to n

egot

iate

, and

line

min

istry

prio

ritie

s ha

ve n

orm

ally

bee

n fo

llow

ed.

The

WB

mov

ed fr

om o

bser

ver s

tatu

s to

full

mem

bers

hip

in 2

004,

and

in 2

005

adop

ted

the

PA

F m

atrix

as

the

basi

s to

“trig

ger”

its

Pov

erty

R

educ

tion

Stra

tegy

Cre

dits

(PR

SC

s).

Alig

nmen

t with

PA

RP

A (s

ee

abov

e). T

he P

AR

PA

und

erlie

s al

l pl

anni

ng d

ocum

ents

but

the

dono

r–G

OM

col

labo

ratio

n no

w

unite

s on

the

PA

F.

Ear

mar

ked

BS

in H

ealth

, E

duca

tion

and

Agr

icul

ture

are

in

prin

cipl

e al

igne

d w

ith th

e P

AR

PA

an

d w

ith s

ecto

ral p

lans

. A

s a

resu

lt of

the

dom

inan

ce o

f th

e ke

y lin

e m

inis

tries

, nat

iona

l po

licy

has

been

stro

ngly

in

fluen

ced

by d

onor

–gov

ernm

ent

dial

ogue

at s

ecto

r lev

el. T

he

2001

–05

PA

RP

A w

as b

uilt

on

the

subm

issi

ons

of m

inis

tries

an

d no

t deb

ated

wid

ely

acro

ss

gove

rnm

ent.

Line

min

istri

es c

ontin

ue to

be

impo

rtant

focu

ses

of s

ecto

r aid

bu

t:

(a) p

oole

d fu

nds

for s

peci

fic

uses

are

bei

ng g

roup

ed in

to

com

mon

fund

s fo

r mor

e ge

nera

l us

e;

(b) s

ecto

r sup

port

arra

ngem

ents

ar

e in

crea

sing

ly b

eing

bro

ught

on

-bud

get.

Tech

nica

l ass

ista

nce

for G

BS

an

d B

S is

bro

adly

alig

ned

with

na

tiona

l stra

tegi

es s

ince

it

help

s to

stre

ngth

en th

e G

OM

’s

capa

city

to im

plem

ent i

ts

PA

RP

A. T

A te

nds

to re

mai

n fra

gmen

ted

and

heav

ily

proj

ectis

ed. O

wne

rshi

p of

ca

paci

ty b

uild

ing

prog

ram

mes

is

ther

efor

e re

lativ

ely

wea

k.

The

late

r for

ms

of B

OP

sup

port

wer

e de

sign

ed to

sup

port

the

gove

rnm

ent's

stru

ctur

al

adju

stm

ent p

olic

ies

whi

ch w

ere

aim

ed a

t enh

anci

ng e

cono

mic

gr

owth

and

effi

cien

cy a

s w

ell a

s tra

nspa

renc

y in

reso

urce

al

loca

tion

and

prov

isio

n of

go

vern

men

t ser

vice

s.

The

key

feat

ures

of t

he P

RG

F ar

e:

i) br

oad

parti

cipa

tion

and

grea

ter

owne

rshi

p; ii

) em

bedd

ing

the

PR

GF

in th

e ov

eral

l stra

tegy

for

grow

th a

nd p

over

ty re

duct

ion;

iii)

budg

ets

that

are

mor

e pr

o-po

or

and

pro-

grow

th, e

nsur

ing

appr

opria

te fl

exib

ility

in fi

scal

ta

rget

s; v

) mor

e se

lect

ive

stru

ctur

al c

ondi

tiona

lity;

vi)

emph

asis

on

mea

sure

s to

impr

ove

publ

ic re

sour

ce m

anag

emen

t/ ac

coun

tabi

lity;

and

vii)

soc

ial

impa

ct a

naly

sis

of m

ajor

ad

just

men

ts a

nd s

truct

ural

re

form

s.

Gen

eral

Bud

get S

uppo

rt in

Moz

ambi

que

(188

)

Type

s →

G

ener

al B

udge

t Sup

port

Ea

rmar

ked

BS

TA fo

r GB

S or

PFM

B

OP

Supp

ort

4.

Dis

burs

emen

t Pr

oced

ures

(a

) Is/

was

ther

e an

y fo

rm

of e

arm

arki

ng?

Ple

ase

give

det

ails

. (b

) Tra

nche

s?

(fixe

d/va

riabl

e, e

tc.?

) (c

) Any

arr

ange

men

ts to

al

ign

disb

urse

men

t with

th

e re

cipi

ent's

fina

ncia

l ye

ar (F

Y)?

(d

) Rou

te fo

r tra

nsfe

r of

fund

s (e

.g. d

irect

to

cent

ral b

ank,

to T

reas

ury,

vi

a a

spec

ial a

ccou

nt,

etc.

)?

Ther

e is

no

gene

ral e

arm

arki

ng b

y P

AP

s in

the

MO

U; h

owev

er, t

here

are

don

ors

who

spe

cify

TA

sup

port

to c

erta

in P

FM, M

onito

ring

and

Eva

luat

ion

(M&

E),

mac

ro re

form

are

as e

tc.

PA

Ps

mak

e pr

elim

inar

y co

mm

itmen

ts in

Aug

ust.

A d

isbu

rsem

ent s

ched

ule

is a

gree

d be

twee

n G

OM

and

PA

Ps

befo

re th

e st

art o

f the

fisc

al

year

at t

he D

ecem

ber B

udge

t Wor

king

Gro

up

mee

ting.

GO

M/P

AP

s ar

e co

mm

itted

to

esta

blis

hing

an

agre

ed d

isbu

rsem

ent s

ched

ule,

in

ord

er to

ass

ist G

OM

in im

plem

entin

g its

P

ES

/PA

F co

mm

itmen

ts.

Mai

n fe

atur

es o

f GB

S d

isbu

rsem

ent p

roce

dure

s an

d ac

coun

ting

are:

•

Rel

ease

of f

orei

gn e

xcha

nge

(fore

x) in

to a

co

mm

on a

ccou

nt h

eld

by th

e ce

ntra

l ban

k.

•

Tran

sfer

with

in tw

o da

ys in

to a

Tra

nsiti

onal

A

ccou

nt h

eld

by th

e M

PF

of th

e M

etic

al

equi

vale

nt.

•

Tran

sfer

s of

fund

s fro

m th

e Tr

ansi

tiona

l A

ccou

nt in

to th

e C

entra

l Tre

asur

y A

ccou

nt a

s re

sour

ces

are

requ

ired

for r

elea

se w

ithin

GO

M’s

an

nual

bud

get.

•

PA

Ps

com

mit

to (i

) usi

ng G

OM

pro

cess

es

and

docu

men

tatio

n; (i

i) fo

llow

ing

GO

M’s

cyc

le

for p

lann

ing,

impl

emen

tatio

n, m

onito

ring,

re

porti

ng a

nd fu

ndin

g; (i

ii) in

crea

sing

pr

edic

tabi

lity

of a

id fu

nds,

incl

udin

g by

mak

ing

mul

ti-ye

ar a

gree

men

ts, a

nd n

ot in

terru

ptin

g in

-ye

ar d

isbu

rsem

ents

, unl

ess

unde

rlyin

g pr

inci

ples

are

vio

late

d, e

tc. B

ut, s

ome

dono

rs

find

the

cons

train

ts o

f the

MO

U a

nd P

AF

indi

cato

rs to

o re

stric

tive,

and

som

e si

mpl

y di

sbur

se la

te b

ecau

se o

f bur

eauc

ratic

del

ays.

Fund

s fo

r PR

OA

GR

I are

ea

rmar

ked

for a

gric

ultu

re, p

aid

into

the

BO

M a

ccou

nt a

nd

disb

urse

d to

the

Min

Ag

via

the

Trea

sury

. Fu

nds

from

the

heal

th s

ecto

r P

RO

SA

UD

E a

re a

lloca

ted

to

prov

ince

s by

the

Min

istry

of

Hea

lth (M

OH

). P

rogr

amm

ing

of

fund

s is

car

ried

out b

y pr

ovin

cial

he

alth

aut

horit

ies

in a

n in

tegr

ated

pla

nnin

g ex

erci

se (f

or

all f

unds

and

par

tner

s). T

he

arra

ngem

ent h

as b

een

cons

ider

ed o

n-pl

anni

ng b

ut o

ff-tre

asur

y. H

owev

er, f

unds

ch

anne

lled

thro

ugh

prov

inci

al

finan

ce d

epar

tmen

ts m

ostly

fo

llow

the

rule

s of

the

stat

e bu

dget

. P

oole

d fu

ndin

g in

hea

lth is

bei

ng

brou

ght o

n-bu

dget

. In

Nov

embe

r 20

03, M

OH

and

don

ors

sign

ed

an M

OU

est

ablis

hing

the

on-

plan

ning

and

on-

treas

ury

PR

OS

AU

DE

fund

to s

tart

in

2004

.

The

educ

atio

n se

ctor

's c

omm

on

fund

(FA

SE

) con

tinue

s to

be

man

aged

sep

arat

ely

outs

ide

the

Trea

sury

.

TA is

pro

ject

-bas

ed, a

nd fu

nds

disb

urse

d th

roug

h se

para

te

bank

acc

ount

s.

A p

oole

d do

nor f

und

for

SIS

TAFE

(Int

egra

ted

Sys

tem

fo

r Sta

te F

inan

cial

M

anag

emen

t) w

ith a

sin

gle

bank

acc

ount

is d

raw

n do

wn

for i

mpl

emen

tatio

n of

the

refo

rm p

rogr

amm

e.

Cou

nter

val

ue[o

r cou

nter

valu

e?]

fund

s di

sbur

sed

unde

r BO

P

arra

ngem

ents

wer

e tie

d to

spe

cific

bu

dget

sec

tor s

hare

s.

In th

e ea

rly 1

990s

BO

P w

as

disb

urse

d to

Moz

ambi

que

thro

ugh

com

mer

cial

ban

ks. I

n 19

94 S

wis

s D

evel

opm

ent C

orpo

ratio

n si

mpl

ified

dis

burs

emen

t pr

oced

ures

for i

ts u

ntie

d B

OP

su

ppor

t. D

enm

ark,

Nor

way

and

S

wed

en fo

llow

ed s

uit i

n th

e fir

st

step

to c

reat

ing

the

Fore

ign

Exc

hang

e In

terb

ank

Mar

ket.

Ther

e w

ere

man

y pr

oble

ms

in

Moz

ambi

que

with

late

and

un

pred

icta

ble

disb

urse

men

ts o

f B

OP

fund

s.

Don

ors

did

not u

sual

ly a

gree

m

ulti-

annu

al a

gree

men

ts fo

r BO

P.

The

IMF'

s P

RG

F is

stil

l reg

arde

d as

BO

P s

uppo

rt, ra

ther

than

GB

S,

beca

use

it is

pro

vide

d to

the

cent

ral b

ank.

Ann

ex 3

A: M

ozam

biqu

e In

vent

ory

– G

BS

and

rela

ted

prog

ram

mes

(189

)

Type

s →

G

ener

al B

udge

t Sup

port

Ea

rmar

ked

BS

TA fo

r GB

S or

PFM

B

OP

Supp

ort

5.

Fram

ewor

k of

C

ondi

tiona

lity

and

Perf

orm

ance

In

dica

tors

(a

) Is

ther

e an

und

erly

ing

MO

U o

r sim

ilar

agre

emen

t?

2000

: “Jo

int D

onor

Pro

gram

me

for M

acro

Fi

nanc

ial S

uppo

rt to

the

Gov

ernm

ent o

f M

ozam

biqu

e”.

2004

: MO

U b

etw

een

GB

S p

artn

ers

and

GO

M.

PRO

AGR

I’s (A

gric

ultu

re

SWAp

’s) M

OU

was

sig

ned

in

1999

, and

rene

wed

in 2

001

and

2005

. A

n M

OU

was

sig

ned

in 2

004

for

earm

arke

d se

ctor

sup

port

to th

e he

alth

sec

tor.

D

onor

s he

ld b

ilate

ral a

gree

men

ts

for B

OP

sup

port

and

cont

ribut

ions

to

the

debt

-alle

viat

ion

fund

. The

re

wer

e si

gnifi

cant

diff

eren

ces

in

agre

emen

ts o

win

g to

lack

of

coor

dina

tion.

The

shi

ft to

GB

S

was

par

tly m

otiv

ated

by

the

need

to

sta

ndar

dise

. Fo

rmal

PR

GF

agre

emen

t bet

wee

n IM

F an

d go

vern

men

t.

(b) P

erfo

rman

ce

indi

cato

rs, i

nclu

ding

: �

N

umbe

r of i

ndic

ator

s �

N

atur

e (e

.g. p

roce

ss

indi

cato

rs, r

esul

t in

dica

tors

) �

A

re th

ey d

raw

n fro

m

PR

SP

or o

ther

na

tiona

l pol

icy

docu

men

ts?

�

Are

they

link

ed to

pe

rform

ance

in

dica

tors

for S

ecto

r-W

ide

Appr

oach

es

(SW

Aps

), et

c.?

�

Are

spe

cial

repo

rts

requ

ired?

How

of

ten?

Don

ors

have

com

mitt

ed to

har

mon

ise

deve

lopm

ent a

ssis

tanc

e on

the

PA

RP

A. T

he

dono

r par

tner

s (P

APs

), in

clud

ing

WB

for P

RS

C,

have

agr

eed

a P

AF.

Thi

s ex

pres

ses

the

key

targ

ets

for w

hich

GO

M a

gree

s to

be

held

to

acco

unt.

The

PA

F co

ntai

ns p

roce

ss a

nd o

utco

me

indi

cato

rs d

raw

n fro

m th

e P

RSP

, min

iste

rial

prop

osal

s an

d do

nor r

espo

nses

. At G

OM

re

ques

t the

tota

l num

ber o

f ind

icat

ors

is li

mite

d to

50.

Th

e P

AF

is a

mul

ti-ye

ar ro

lling

mat

rix th

at

desc

ribes

key

ann

ual c

omm

itmen

ts m

ade

by

GO

M in

ord

er to

ach

ieve

the

obje

ctiv

es o

f the

P

RS

P. T

hese

are

am

ende

d fo

llow

ing

each

ye

ar’s

Joi

nt R

evie

w a

nd A

ide

Mém

oire

. PA

F ta

rget

s an

d pe

rform

ance

are

repo

rted

to

parli

amen

t with

the

repo

rt on

the

annu

al P

ES

.

Sec

tora

l ind

icat

ors

are

deriv

ed

from

the

PA

RP

A a

nd th

e P

ES

. S

ecto

ral i

ndic

ator

s us

ed a

s ju

dgem

ent c

riter

ia h

ave

been

br

ough

t int

o th

e P

AF

and

will

co

me

unde

r the

pro

cess

of t

he

Join

t Rev

iew

. S

ecto

ral i

ndic

ator

s ar

e a

mix

ture

of

pro

cess

, inp

ut a

nd o

utpu

t in

dica

tors

. Th

e P

AF

is to

act

as

part

of th

e m

onito

ring

syst

em fo

r sec

tor-

base

d pr

ogra

mm

es, h

elpi

ng to

av

oid

cros

s-co

nditi

onal

ity a

nd

over

lapp

ing

arra

ngem

ents

. Eac

h SW

Ap

sect

or h

olds

an

annu

al

sect

or re

view

pro

cess

. Sec

tors

m

aint

ain

thei

r ow

n ac

coun

ting

and

mon

itorin

g pr

oced

ures

, al

thou

gh th

ese

are

incr

easi

ngly

be

ing

stan

dard

ised

.

U

nder

the

PR

GF

arra

ngem

ent

stru

ctur

al c

ondi

tiona

lity

build

s on

th

ose

of E

SA

F co

ntin

uing

to

refle

ct a

reas

of m

acro

econ

omic

re

leva

nce,

suc

h as

: stre

ngth

enin

g ta

x ad

min

istra

tion;

impr

ovin

g pu

blic

exp

endi

ture

man

agem

ent;

and

stre

ngth

enin

g an

d de

velo

pmen

t of t

he fi

nanc

ial

sect

or.

Gen

eral

Bud

get S

uppo

rt in

Moz

ambi

que

(190

)

Type

s →

G

ener

al B

udge

t Sup

port

Ea

rmar

ked

BS

TA fo

r GB

S or

PFM

B

OP

Supp

ort

(c) T

ypes

of c

ondi

tion,

in

clud

ing:

�

Tr

igge

rs fo

r tra

nche

re

leas

e?

�

Due

pro

cess

co

nditi

ons

(lega

lly

bind

ing

requ

irem

ents

fo

r don

ors

and

reci

pien

ts in

giv

ing

and

rece

ivin

g m

oney

) �

Is

sat

isfa

ctor

y IM

F st

atus

a c

ondi

tion?

�

O

ther

pol

icy

and

perfo

rman

ce

cond

ition

s (c

f. pe

rform

ance

in

dica

tors

) �

P

oliti

cal c

ondi

tions

(e

.g. r

elat

ed to

de

moc

racy

, hum

an

right

s, c

orru

ptio

n,

mili

tary

spe

ndin

g an

d ac

tivity

�

B

road

er p

oliti

cal

cond

ition

ality

(b

eyon

d th

e fo

rmal

co

nditi

ons,

e.g

. as

reve

aled

by

inte

rrup

tions

and

pr

oble

ms

men

tione

d ag

ains

t Ite

m 1

0)

PA

Ps

may

cho

ose

betw

een

mak

ing

a si

ngle

re

spon

se b

ased

on

the

join

t vie

w o

f pe

rform

ance

or a

spl

it re

spon

se, w

ith o

ne p

art

(fixe

d po

rtion

) bei

ng b

ased

on

the

join

t vie

w o

f pe

rform

ance

and

the

othe

r par

t (va

riabl

e po

rtion

) bei

ng li

nked

to s

peci

fic, t

rans

pare

nt

com

mitm

ents

dra

wn

from

the

PA

F an

d ag

reed

w

ith G

OM

. Th

e E

C, S

witz

erla

nd a

nd S

wed

en o

pera

te s

plit-

re

spon

se tr

anch

e sy

stem

s w

ith a

fixe

d tra

nche

co

mm

itted

as

in th

e ca

se o

f the

oth

er d

onor

s,

and

varia

ble

tranc

hes

paid

aga

inst

spe

cific

PA

F cr

iteria

. Sw

eden

is to

cea

se to

ope

rate

this

m

echa

nism

. P

AP

s w

ith a

spl

it re

spon

se a

gree

to:

• c

omm

it th

e fix

ed p

ortio

n as

abo

ve.

• a

s ot

her d

onor

s, m

ake

indi

cativ

e co

mm

itmen

ts fo

r yea

r n+1

for t

he v

aria

ble

porti

on w

ithin

four

wee

ks o

f the

end

of t

he

annu

al J

oint

Rev

iew

and

con

firm

ed

com

mitm

ents

not

late

r tha

n 31

Aug

ust.

Com

mitm

ents

may

cha

nge

on th

e ba

sis

of

furth

er in

form

atio

n ab

out G

OM

pe

rform

ance

on

spec

ific

indi

cato

rs in

yea

r n-

1 an

d/or

per

form

ance

on

spec

ific

indi

cato

rs in

yea

r n u

ntil

the

mom

ent o

f the

m

id-te

rm re

view

. O

nce

conf

irmed

, com

mitm

ents

can

not b

e ch

ange

d, a

nd c

omm

itted

fund

s w

ill b

e di

sbur

sed,

exc

ept w

hen

PA

Ps b

elie

ve th

at

ther

e ha

s be

en a

vio

latio

n of

an

unde

rlyin

g pr

inci

ple,

or a

s a

cons

eque

nce

of a

pa

rliam

enta

ry d

ecis

ion

or w

hen

one

of th

e sp

ecifi

c co

nditi

ons

for i

ndiv

idua

l PA

Ps

appl

ies.

P

GB

S is

pro

vide

d on

the

basi

s th

at

Moz

ambi

que

rem

ains

on

track

with

the

IMF’

s P

RG

F (s

ee la

st c

olum

n).

The

IMF

and

its P

RG

F pl

ay a

key

ro

le in

agr

eein

g ta

rget

s fo

r the

fis

cal f

ram

ewor

k in

Moz

ambi

que.

Th

e IM

F ho

lds

cons

ulta

tions

prio

r to

the

form

ulat

ion

of th

e bu

dget

on

mac

roec

onom

ic a

spec

ts, s

ettin

g ex

pend

iture

lim

its w

hich

are

bro

ad

pove

rty p

rogr

amm

e ex

pend

iture

ta

rget

s se

t as

a pe

rcen

tage

of

GD

P, a

nd a

lso

targ

ets

for m

ilitar

y sp

endi

ng, o

vera

ll de

ficit,

and

net

cr

edit

to g

over

nmen

t arr

ears

. The

ke

y de

term

inin

g fa

ctor

in th

e se

tting

of e

xpen

ditu

re li

mits

is th

e bu

dget

def

icit,

bei

ng th

e co

rner

ston

e of

the

PR

GF

agre

emen

t. Th

e P

RG

F al

so li

nks

into

the

Med

ium

Ter

m

Exp

endi

ture

Fra

mew

ork

(MTE

F)

and

the

PA

RP

A, p

uttin

g a

prac

tical

reso

urce

con

stra

int o

n th

e P

AR

PA

and

forc

ing

it to

be

impl

emen

ted

with

resp

ect t

o re

sour

ce a

vaila

bilit

y. T

here

co

ntin

ue to

be

stru

ctur

al

perfo

rman

ce c

riter

ia li

nked

to th

e P

RG

F, e

.g. a

ppro

val b

y C

ounc

il of

M

inis

ters

of t

he n

ew c

ode

of fi

scal

in

cent

ives

; app

rova

l by

Cou

ncil

of

Min

iste

rs o

f the

new

cod

es fo

r the

co

rpor

ate

and

pers

onne

l inc

ome

taxe

s.

Ann

ex 3

A: M

ozam

biqu

e In

vent

ory

– G

BS

and

rela

ted

prog

ram

mes

(191

)

Type

s →

G

ener

al B

udge

t Sup

port

Ea

rmar

ked

BS

TA fo

r GB

S or

PFM

B

OP

Supp

ort

6.

Link

s to

TA

an

d C

apac

ity

build

ing

�

Is

cap

acity

bui

ldin

g an

exp

licit

obje

ctiv

e of

this

pro

gram

me?

�

A

re a

ny T

A/c

apac

ity

build

ing

cond

ition

s at

tach

ed to

this

pr

ogra

mm

e?

�

Are

the

GB

S d

onor

s pr

ovid

ing

rele

vant

TA

/cap

acity

bui

ldin

g su

ppor

t in

para

llel t

o th

is o

pera

tion?

�

A

re o

ther

don

ors

prov

idin

g re

leva

nt

TA/c

apac

ity b

uild

ing

supp

ort i

n pa

ralle

l to

this

ope

ratio

n?

GO

M h

as s

ever

e ca

paci

ty p

robl

ems,

bot

h in

its

syst

ems

of P

FM a

nd in

hum

an re

sour

ces.

Th

e Jo

int R

evie

w p

roce

ss s

omet

imes

ov

erw

helm

s th

e ca

paci

ty o

f GO

M to

eng

age

in

dial

ogue

, und

erta

ke re

form

s an

d ex

ecut

e th

e in

crea

sing

nat

iona

l bud

get.

By

addi

ng a

noth

er

aid

mod

ality

, PG

BS

cou

ld b

e sa

id to

hav

e in

crea

sed

the

burd

ens

on g

over

nmen

t cap

acity

. H

owev

er, t

his

is c

ount

erac

ted

by th

e ef

fect

of

the

proc

ess

in b

ringi

ng P

GB

S, s

ecto

r sup

port

and

even

pro

ject

aid

into

alig

nmen

t on

com

mon

sy

stem

s.

Cap

acity

dev

elop

men

t in

the

key

PG

BS

m

inis

try, M

PF,

has

bee

n fra

gmen

ted

and

proj

ectis

ed b

etw

een

dono

rs, a

lthou

gh th

ere

are

now

dis

cuss

ions

abo

ut p

oolin

g it

thro

ugh

a co

mm

on fu

nd.

Cap

acity

dev

elop

men

t has

bee

n m

ore

succ

essf

ul in

a “l

earn

ing

by d

oing

” mod

e. T

he

SIS

TAFE

sys

tem

for a

ccou

ntin

g an

d pa

ymen

t tra

nsfe

rs is

bei

ng ro

lled

out t

o m

inis

tries

with

an

acco

mpa

nyin

g tra

inin

g pr

ogra

mm

e. T

he P

AF

requ

ires

asse

ssm

ents

of p

rogr

ess

to b

e un

derta

ken

and

shar

ed b

etw

een

min

istri

es.

MP

F an

d lin

e m

inis

tries

are

dev

elop

ing

a st

rong

er d

ialo

gue

abou

t bud

get p

riorit

ies.

The

A

dmin

istra

tive

Trib

unal

is u

nder

taki

ng b

ette

r an

d qu

icke

r aud

its o

f sta

te b

odie

s an

d th

e st

ate

acco

unts

.

Cap

acity

bui

ldin

g ha

s be

en a

ke

y el

emen

t of a

ll se

ctor

bud

get

supp

ort i

n M

ozam

biqu

e. S

ecto

ral

capa

city

bui

ldin

g ha

s ar

guab

ly

been

bet

ter c

oord

inat

ed a

nd

effe

ctiv

e in

line

min

istri

es th

an in

th

e M

PF

as a

resu

lt of

TA

link

ed

to P

GB

S.

Wea

knes

ses

rem

ain

in

gove

rnm

ent’s

cap

acity

to p

lan,

m

anag

e pu

blic

fina

nces

and

ex

ecut

e bu

dget

s. D

onor

–go

vern

men

t col

labo

ratio

n m

ay

have

got

ahe

ad o

f GO

M

capa

city

to p

erfo

rm c

ore

PFM

fu

nctio

ns. P

rovi

sion

of G

BS

an

d qu

asi B

S h

as h

eigh

tene

d aw

aren

ess

by d

onor

s of

thes

e de

ficie

ncie

s.

Var

ious

don

ors

prov

ide

TA to

a

num

ber o

f dep

artm

ents

and

un

its in

the

MP

F an

d to

the

adm

inis

trativ

e tri

buna

l. A

pro

gram

me

for r

efor

m o

f P

FM s

yste

ms

has

been

de

velo

ped

and

man

y do

nors

pr

ovid

ing

GB

S p

rovi

de m

oney

fo

r TA

in th

is a

rea.

In

term

s of

cap

acity

bui

ldin

g,

mor

e ha

s fo

cuse

d on

line

m

inis

tries

than

on

PFM

. A

n In

term

inis

teria

l Com

mis

sion

fo

r Pub

lic S

ecto

r Ref

orm

(P

SR

) and

uni

t for

PS

R

(UTR

ES

P) w

ere

esta

blis

hed

in

2000

but

see

m to

hav

e m

ade

slow

pro

gres

s.

Don

ors

and

GO

M a

re in

crea

sing

ly

awar

e th

at th

e M

PF

need

s ur

gent

ca

paci

ty b

uild

ing,

pro

babl

y in

the

form

of p

oole

d TA

.

Gen

eral

Bud

get S

uppo

rt in

Moz

ambi

que

(192

)

Type

s →

G

ener

al B

udge

t Sup

port

Ea

rmar

ked

BS

TA fo

r GB

S or

PFM

B

OP

Supp

ort

7.

Proc

edur

es fo

r D

ialo

gue

Wha

t is

the

gene

ral

cont

ext o

f dia

logu

e (e

.g.

Con

sulta

tive

Gro

up [C

G]

mee

tings

, etc

.)?

Spe

cific

dia

logu

e ar

rang

emen

ts li

nked

to

this

pro

gram

me?

Ther

e ar

e fo

ur m

ain

plat

form

s fo

r GB

S

dial

ogue

: (i)

Ann

ual r

evie

w o

f per

form

ance

ove

r the

pr

evio

us fi

nanc

ial y

ear (

FY) a

gain

st th

e P

AF.

(ii

) Mid

-yea

r rev

iew

focu

sing

on

forw

ard

plan

ning

and

bud

getin

g fo

r nex

t fin

anci

al y

ear,

and

agre

emen

t on

the

basi

s of

the

follo

win

g ye

ar’s

PA

F (p

rior t

o su

bmis

sion

of t

he P

ES

and

st

ate

budg

et to

par

liam

ent).

(ii

i) Jo

int B

udge

t Wor

king

Gro

up d

iscu

sses

bu

dget

exe

cutio

n an

d di

sbur

sem

ent s

ched

ules

. (iv

) The

mat

ic a

nd w

orki

ng g

roup

s an

d P

AF

Coo

rdin

atin

g G

roup

mee

t to

revi

ew

perfo

rman

ce.

(iv) A

Pov

erty

Obs

erva

tory

of G

OM

, don

or a

nd

civi

l soc

iety

repr

esen

tativ

es m

eets

ann

ually

at

the

time

of th

e A

nnua

l Rev

iew

. Th

e an

nual

revi

ew fo

cuse

s on

per

form

ance

as

sess

men

t, w

hich

ser

ves

as th

e ba

sis

for

com

mitm

ents

. The

mid

-yea

r rev

iew

focu

ses

on

dial

ogue

on

forw

ard

plan

ning

and

bud

getin

g an

d ag

reem

ent o

n th

e P

AF.

Sec

tor r

evie

ws

have

his

toric

ally

fo

llow

ed a

diff

eren

t tim

etab

le

from

GB

S b

ut a

re n

ow b

eing

dr

awn

into

the

sam

e cy

cle,

par

tly

as a

resu

lt of

line

min

istry

pa

rtici

patio

n in

the

Join

t Rev

iew

pr

oces

s. In

200

5, th

e M

inis

try o

f E

duca

tion

(MO

E) u

nder

took

its

sect

or re

view

in A

pril,

follo

win

g th

e fra

mew

ork

as w

ell a

s th

e tim

ing

of th

e Jo

int R

evie

w a

nd

budg

et.

Dia

logu

e fo

r TA

for G

BS

and

fo

r BS

is g

ener

ally

und

erta

ken

on a

nee

ds b

asis

.

Dia

logu

e fo

r BO

P s

uppo

rt to

ok

plac

e in

the

cont

ext o

f CG

m

eetin

gs. H

owev

er, C

G m

eetin

gs

wer

e fre

quen

tly h

eld

outs

ide

Moz

ambi

que

and

ther

efor

e ha

d lim

ited

Moz

ambi

can

parti

cipa

tion.

IM

F's

PR

GF

disc

ussi

ons

are

sepa

rate

from

the

PG

BS

dia

logu

e,

but c

oord

inat

ion

has

incr

ease

d.

Ann

ex 3

A: M

ozam

biqu

e In

vent

ory

– G

BS

and

rela

ted

prog

ram

mes

(193

)

Type

s →

G

ener

al B

udge

t Sup

port

Ea

rmar

ked

BS

TA fo

r GB

S or

PFM

B

OP

Supp

ort

8.

Don

or

Har

mon

isat

ion

and

Alig

nmen

t (H

&A

) G

ener

al c

onte

xt o

f H&

A

activ

ities

(e.g

. is

ther

e a

CD

F[sp

ell o

ut fi

rst]

pilo

t?

Stra

tegi

c P

artn

ersh

ip w

ith

Afri

ca [S

PA

] act

ive?

) Is

H&

A b

uilt

in to

the

BS

op

erat

ion

(e.g

. com

mon

ca

lend

ar, j

oint

mis

sion

s,

com

mon

set

of i

ndic

ator

s,

pool

ing

of B

S fu

nds,

de

lega

ted

coop

erat

ion

or

sile

nt p

artn

ersh

ips)

? Jo

int d

iagn

ostic

and

pe

rform

ance

revi

ews

(do

thes

e al

so in

corp

orat

e no

n-B

S d

onor

s, e

.g. a

s pa

rt of

SW

Ap,

Pub

lic

Exp

endi

ture

Rev

iew

[P

ER

], et

c.)?

Inde

pend

ent a

sses

smen

t sho

ws

that

PA

Ps

are

incr

easi

ngly

mou

ntin

g jo

int m

issi

ons,

un

derta

king

join

t ana

lysi

s, u

sing

join

t pr

oced

ures

and

redu

cing

the

num

ber o

f vis

its

and

over

lapp

ing

activ

ities

. A

“Tro

ika”

plu

s gr

oup

cons

istin

g of

pre

viou

s an

d pr

esen

t fut

ure

chai

rper

son

of th

e P

AP

s pl

us th

e E

C a

nd W

B m

eets

fortn

ight

ly a

nd is

man

date

d to

act

on

beha

lf of

Hea

ds o

f Coo

pera

tion

(HO

C).

A P

AF

coor

dina

tion

grou

p m

eets

mon

thly

to

cons

ider

GO

M p

olic

y an

d pe

rform

ance

and

pr

epar

e fo

r dia

logu

e w

ith g

over

nmen

t. It

incl

udes

the

Troi

ka g

roup

and

cha

irs o

f the

se

ctor

wor

king

gro

ups

and

the

cros

s-cu

tting

re

form

gro

ups.

A

PA

P e

cono

mis

ts w

orki

ng g

roup

mee

ts

fortn

ight

ly to

ana

lyse

per

form

ance

and

im

plem

enta

tion

for t

he H

OC

. Th

e m

onito

ring

and

dial

ogue

pro

cess

es a

re jo

int

and

follo

w a

n an

nual

revi

ew p

roce

ss a

ligne

d w

ith G

OM

’s p

lann

ing,

bud

getin

g an

d m

onito

ring

cycl

e.

Mon

itorin

g an

d di

alog

ue p

roce

sses

focu

s on

the

docu

men

ts s

ubm

itted

by

GO

M to

par

liam

ent.

All

form

al p

erfo

rman

ce a

sses

smen

ts a

re n

orm

ally

un

derta

ken

join

tly b

y G

OM

and

PA

Ps

and

not

bila

tera

lly e

xcep

t whe

n P

AP

legi

slat

ion

requ

ires

a na

tiona

l or i

nstit

utio

nal a

udit

auth

ority

to

unde

rtake

thei

r ow

n as

sess

men

t.

The

first

cas

es o

f for

mal

don

or

harm

onis

atio

n w

ere

in th

e he

alth

se

ctor

and

took

the

form

of

com

mon

poo

l or b

aske

t fun

ding

. In

199

9 Ire

land

and

Nor

way

jo

ined

the

Sw

iss

in e

arm

arke

d bu

dget

sup

port

to th

e he

alth

se

ctor

, est

ablis

hing

the

FCP

. S

ince

then

man

y ot

her d

onor

s ha

ve jo

ined

the

sche

me

GB

S s

ecto

r and

cro

ss-c

uttin

g w

orki

ng g

roup

s m

eet w

eekl

y or

as

def

ined

by

the

grou

p.

UN

DP

was

at t

he c

entre

of a

id

coor

dina

tion

as it

hea

ds th

e D

evel

opm

ent P

artn

ers

Gro

up

(DP

G),

Und

er D

PG

ther

e is

a

mon

thly

Hea

ds o

f Mis

sion

m

eetin

g ch

aire

d by

UN

DP

or t

he

WB

and

a se

ries

of s

peci

fic

wor

king

gro

ups

refle

ctin

g do

nor

inte

rest

s. B

ut th

is h

as e

ffect

ivel

y be

en ta

ken

over

by

the

PG

BS

pr

oces

s.

Out

side

the

Gro

up o

f 17

dono

rs,

Japa

n, U

SA

, UN

and

AfD

B a

re

Obs

erve

rs. T

hey

coor

dina

te

aspe

cts

of th

eir a

id a

nd

parti

cipa

te in

som

e w

orki

ng

grou

ps w

ithou

t pro

vidi

ng G

BS

fu

ndin

g.

Ther

e is

a c

omm

on p

ool f

und

for S

ISTA

FE w

hich

con

tain

s el

emen

ts o

f cap

acity

bui

ldin

g.

The

dono

rs jo

intly

revi

ew

prog

ress

in th

is a

rea.

A

ll ar

eas

whi

ch fa

ll un

der

PG

BS

, e.g

. tax

, cus

tom

s,

bank

ing

sect

or, e

tc. w

ould

be

join

tly re

view

ed a

s fa

r as

they

fa

ll un

der t

he P

GB

S m

onito

ring

and

eval

uatio

n m

echa

nism

. To

the

exte

nt th

at c

apac

ity

build

ing

is u

nder

take

n th

roug

h a

proj

ect(s

), it

is li

kely

that

this

w

ould

be

indi

vidu

ally

revi

ewed

an

d m

onito

red.

TA fo

r BO

P w

as p

rovi

ded

on a

pr

ojec

t bas

is in

an

unco

ordi

nate

d ad

hoc

way

. M

issi

ons

wer

e no

t coo

rdin

ated

an

d th

e fir

st e

xam

ple

of a

join

t re

view

of B

OP

was

pro

babl

y in

19

98 “J

oint

Rev

iew

of B

alan

ce o

f P

aym

ents

sup

port”

Aid

e M

émoi

re.

Gen

eral

Bud

get S

uppo

rt in

Moz

ambi

que

(194

)

Type

s →

G

ener

al B

udge

t Sup

port

Ea

rmar

ked

BS

TA fo

r GB

S or

PFM

B

OP

Supp

ort

9.

Expe

rienc

e in

Im

plem

enta

tion

If co

mpl

eted

, how

was

it

rate

d?

Any

par

ticul

ar p

robl

ems,

in

terr

uptio

ns e

tc?

Ple

ase

give

det

ails

. A

ny s

peci

fic re

view

s or

ev

alua

tions

ava

ilabl

e?

The

mov

emen

t to

inte

grat

ion

of th

e P

RS

C a

nd

the

GB

S P

AF

mat

rix is

a m

ajor

mov

e fo

rwar

d fo

r G

OM

and

GB

S d

onor

s. M

ozam

biqu

e is

toda

y co

nsid

ered

to b

e a

fore

runn

er in

the

utilis

atio

n of

ex

istin

g an

d th

e se

tting

of n

ew O

EC

D D

AC

be

st-p

ract

ice

prin

cipl

es fo

r don

or h

arm

onis

atio

n an

d co

ordi

natio

n. R

evie

ws

by S

trate

gic

Par

tner

ship

with

Afri

ca (S

PA

) (20

04 a

nd 2

005;

K

illic

k et

al 2

005)

. G

OM

has

wel

com

ed th

e re

duct

ion

in b

ilate

ral

mee

tings

and

don

or-s

peci

fic re

porti

ng

requ

irem

ents

, the

focu

sing

of d

ialo

gue

and

impr

oved

leve

l of t

rans

pare

ncy

in e

xter

nal

finan

cing

. Th

e 20

00 a

gree

men

t ran

into

pro

blem

s re

latin

g to

the

unpr

edic

tabi

lity

of G

BS

pro

gram

me

that

is

at th

e co

re o

f the

gov

ernm

ent’s

fina

nces

, fu

ndin

g 25

% o

f rec

urre

nt e

xpen

ditu

re.


(195)

Annex 3B: PGBS Flows

Commentary on data

The data sources that were used for in the GBS study come from five primary sources:

(1) The OECD DAC website of International Development Statistics Online (available from http://www.oecd.org/dac): table Destination of Official Development Assistance and Official Aid – Disbursements (Table 2a). The OECD DAC data is in calendar years and in nominal terms. The OECD DAC total ODA data is new loans extended plus grants disbursed (OECD DAC 2005–2006).

(2) Ministry of Planning and Finance.

(3) The IMF website: www.imf.org

(4) The World Bank website: www.worldbank.org

(5) The PAP secretariat: www.pap.org.mz

(6) The 2005 questionnaire which was circulated to international partners: “Questionnaire to donors, Evaluation of General Budget Support”.

The Standard Summary table which follows provides an overview of PGBS and other aid flows 1994–2004 using internationally comparable data (OECD DAC, IMF, GOM – MPF). Rows A, B, J and K are sourced from the OECD DAC database. Row C has been sourced from the PAP secretariat and row D from the IMF website and the OECD DAC website. Row E has been summarised from data collected through the 2005 donor questionnaire. These data should be treated with care, as they are not complete. Rows F and G are sourced from the MPF. All other calculations in this table are the authors’ own.

Gen

eral

Bud

get S

uppo

rt in

Moz

ambi

que

(196

)

Tabl

e 3B

.1 S

umm

ary

of P

GB

S Fl

ows

(a

ll in

USD

mill

ion

unle

ss in

dica

ted

othe

rwis

e)19

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

04So

urce

(A)

Tota

l OD

A (a

ctua

l) [1

]1,

255.

441,

275.

3095

6.66

959.

381,

106.

581,

646.

841,

096.

3399

2.47

2,33

0.26

1,09

2.22

1,28

9.13

OEC

D D

AC

(B)

Tota

l OD

A ex

cl. e

mer

genc

y an

d fo

od a

id (a

ctua

l) [1

]1,

229.

111,

178.

2889

4.78

893.

981,

049.

291,

598.

2795

6.95

870.

912,

272.

421,

041.

011,

217.

22O

ECD

DAC

(C)

Tota

l Par

tner

ship

GB

S di

sbur

sem

ents

[2]

00

00

00

29.5

088

.17

100.

7015

3.70

239.

41D

onor

s pr

ovid

ing

PG

BS

Net

herla

nds,

N

orw

ay, U

KD

enm

ark,

EC

, Ire

land

, N

ethe

rland

s,

Nor

way

, S

wed

en,

Sw

itzer

land

, U

K

Den

mar

k, E

C,

Irela

nd, F

ranc

e,

Net

herla

nds,

N

orw

ay, S

wed

en,

Sw

itzer

land

, UK

Den

mar

k, E

C,

Finl

and,

Fra

nce,

Ire

land

, N

ethe

rland

s,

Nor

way

, Sw

eden

, S

witz

erla

nd, U

K

Bel

gium

, Den

mar

k,

EC

, Fin

land

, Fra

nce,

G

erm

any,

Irel

and,

Ita

ly, N

ethe

rland

s,

Nor

way

, Por

tuga

l, S

wed

en, S

witz

erla

nd,

UK,

WB

(D)

[ESA

F pr

ogra

mm

es] f

ollo

wed

by

PRG

F (d

isbu

rsem

ents

) [3]

[2

1][0

][1

8][3

5][2

5]21

.00

45.2

08.

408.

408.

402.

40IM

F (v

ario

us) c

ited

Ann

ex 3

A In

vent

ory

Tota

l oth

er u

near

mar

ked

prog

ram

me

aid

(dis

burs

emen

ts) [

4]

-

-

95.6

316

8.96

128.

4919

7.85

24.4

050

.42

110.

8894

.23

16.3

5D

onor

s pr

ovid

ing

unea

rmar

ked

prog

ram

me

aid

Can

ada,

E

C, I

taly

, Ja

pan,

S

wed

en

Den

mar

k,

EC,

Sw

eden

, W

B

Den

mar

k,

EC

, Jap

an,

UK

Finl

and,

S

wed

en,

UK

, WB

EC

, N

ethe

rland

s,

Nor

way

, S

wed

en, U

K

Den

mar

k, E

C,

Irela

nd, I

taly

, N

ethe

rland

s,

Nor

way

, S

wed

en,

Sw

itzer

land

, U

K

Den

mar

k, E

C,

Irela

nd, J

apan

, Ita

ly, F

ranc

e,

Net

herla

nds,

N

orw

ay, S

wed

en,

Sw

itzer

land

, UK

Den

mar

k, E

C,

Finl

and,

Fra

nce,

Ire

land

, N

ethe

rland

s,

Nor

way

, Sw

eden

, S

witz

erla

nd, U

K,

WB

Bel

gium

, Den

mar

k,

EC

, Fin

land

, Fra

nce,

G

erm

any,

Irel

and,

Ita

ly, J

apan

, N

ethe

rland

s, N

orw

ay,

Por

tuga

l, S

wed

en,

Switz

erla

nd, U

K, W

B

(F)

HIP

C fu

ndin

g0

00

00

373.

0050

1.18

1077

.63

523.

0034

7.96

484.

00M

PF

(G)

Cen

tral

Gov

ernm

ent E

xpen

ditu

re [5

] 15

4.34

113.

5910

3.90

112.

1775

7.89

919.

081,

080.

391,

145.

551,

182.

811,

216.

071,

468.

77M

PF

(Ga )

OD

A as

% o

f GN

I60

.46%

49.8

9%33

.22%

29.4

6%28

.40%

21.3

1%25

.39%

29.7

9%64

.63%

25.1

7%23

.62%

OEC

D D

AC

(H)

PGB

S as

% to

tal O

DA

(%)

2.69

%8.

88%

4.32

%14

.07%

18.5

7%(I)

PGB

S as

% c

entr

al g

over

nmen

t exp

endi

ture

(%)

2.73

%7.

70%

8.51

%12

.64%

16.3

0%

Not

es[1

] OEC

D D

AC

dat

a is

in c

alen

dar y

ears

. Al

l oth

er d

ata

is in

fina

ncia

l yea

rs (1

994

= FY

1994

/95)

[2

] In

line

with

the

Ann

ex 3

A (in

vent

ory)

, PG

BS s

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Table 3B.2: GBS and Related Commitments by Donor 1996–2005 (USD million) DONOR/PROGRAMME 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

GBS 3.65 2.30TA (SISTAFE common fund) 0.90 0.90

BOP 0.15GBS 2.00

FASE 9.00 4.20 8.80PROAGRI 3.00 4.20

PROSAUDE 2.50 5.00Support for Educational Materials 4.50 14.00

CNCS Common Fund 1.00 2.10

BOP 6.23 8.96 30.00GBS 8.50 9.60 8.80 10.00 10.00

Import Support 10.20 10.10 67.80 10.58 13.50 5.34 13.38 23.53 6.35 9.78GBS 23.00 3.00

GBS – PRSP II 35.00 76.70 70.44 56.66Fixed 35.00 39.80 36.66 38.87

Variable 0.00 8.31 10.99 17.96Agriculture (PROAGRI) 5.46 6.80 10.87

Roads SWAp 5.00Health (PROSAUDE) 2.50

Health Common Fund for Medication 7.50Health Common Fund (Provincial) 3.00

Education(FASE)

TA (SISTAFE common fund) 3.10 3.20

BOP 4.68GBS 3.20 4.60 4.60

SBS 0.88 3.68 0.70GBS 1.30 3.20 3.75 3.60

HIPC I and II 16.80 23.90 1.30 1.80 436.80 0.50

Education (FASE) 5.80 2.35GBS 4.20 4.20

ESAF (1990–1995)ESAF (1996–1999) 36.70 36.70 36.70

ESAF (1999–2001) USD 78.50m over 3-years 26.50

PRGF (2000–2003122.91 includes 1999 commitments

PRGF (2004–6) (3 year USD 16.6m arrangement) 5.33 5.33

SBS 0.58 1.38 3.45 5.98 9.20 19.55 20.70 23.00GBS 3.44 5.10 5.70 7.00 9.00

BOP 13.00 0.10HIPC II 600.00

Import Support 23.00GBS (2004–6) 3.80 3.80

Macroeconomic Support to GOM - Donor Monitoring 0.10

Agriculture (PROAGRI) 1.15 2.00Health (PROSAUDE)

BOP 15.00 15.00 15.00 5.00 10.00

12.50

Belgium

Canada

Denmark

EC

Finland

France

Germany

IMF

30.72 30.72 30.72 30.72

Ireland

Italy

Japan


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DONOR/PROGRAMME 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

BOP 10.38 15.90Agriculture (PROAGRI) 3.08 1.73 2.07

Education (FASE) 1.15 3.65Environment (MICOA) 0.29 0.39 1.15Health (PROSAUDE) 2.53 3.91Water and Sanitation 1.27 1.38 3.80

BS for SISTAFE 2.65BS for reconstruction (floods) 13.23 2.83 2.83

GBS 6.40 17.60 13.69 20.70 11.50 16.10

BOP 7.12 7.52GBS 10.12 10.70 8.97 10.35 10.24 10.35

GBS 2.16 1.73

GBS 3.50

BOP 10.88 15.93 6.05 10.90MSAt 1.95 0.18 1.58

Administrative Tribunal (MPF) 1.46 2.06 1.28Policy centre (MPF) 1.21 1.60

MPF – general 0.44 0.83National Institute of Statistics 1.86 0.44 1.79

General Finance Inspector-MPFSBS

Agriculture (PROAGRI)Education (FASE)

Provincial Budget support (Niassa) 0.49 0.49 0.79

GBS 9.38 9.40 9.40

First tranche

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second tranche

USD 4.5m

First tranche

USD 9.3m and

second tranche

USD 4.0m

Economic Management Support 4.70 1.60 1.50 1.50TA for GBS reform for tax reform 0.75 0.80 1.30 0.35 1.40 0.58 0.60

PRU – MPFHealth (PROSAUDE) 3.99 5.16 5.16

GBS 4.85 4.50 5.30 3.70 3.70GBS 2nd trache 3.70 3.70

Emergency aid – untied BS 2.81BOP/BS 4.85 4.85 4.85 4.85

BOP 0.03 0.04TA

Strengthen Plan &Budget (TC) 0.08Customs Reform 0.02

Budget Support 0.01 0.01Support to SISTAFE 0.05 0.15 0.10

PSR 0.01 0.01SBS 0.60

Agriculture (PROAGRI) 0.45 0.45 0.45 0.24 0.14 0.33 0.31 0.18 0.15GBS 15.20 14.38 14.60 15.00 27.40 50.00

Financial sector capacity building 2.00 1.40 0.30SBS 22.50

Health sector support - Health Sector Recovery Project (USD 98.7m 96) 98.70

Education Sector Strategic Programme (ESSP) (for total programme) 71.00

GBS

Economic management reform operation 150.00

Third economic recovery operation 100.00

Economic management reform (EPMSO) 63.50 70.70

PRSC (GBS) 60.00 60.00

Netherlands

Norway

Portugal

World Bank

Spain

Sweden

Switzerland

United Kingdom

Source: GBS Evaluation donor questionnaire, PAP Secretariat and donor interviews.


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Annex 3C: The Design of PGBS in Mozambique

Introduction 1. Partnership GBS in Mozambique is unusually complex. Its present form owes much to the circumstances in which it was created and to a series of subsequent adjustments in response to formative experiences. This annex explains the present design of PGBS and how it evolved. 2. The evolution of donor coordination and of forms of programme aid in Mozambique derives from the collaboration of the “like-minded group” (the Nordic countries, Canada, the Netherlands and Switzerland) in times of civil war, coordination of their import support and food aid programmes, and the division of sectoral leadership roles between Sweden (education) and Switzerland (health). A wider group of bilateral donors supported the IMF's Structural Adjustment Facility (SAF) in the form of BOP support from 1990. Two rounds of HIPC debt relief from 1996/97 (decision point was reached in 1998, and approval given in 1999) and the discussion and then eventual approval by the WB of the PRSP (PARPA) in 2001 created the conditions for donor alignment on an agreed poverty reduction strategy. The bilateral donors began to formulate plans for a common programme of GBS in 1998. The IMF switched its loans from ESAF to PRGF conditions aligned with the PARPA from 1999; but it was not until 2004 that the WB began a PRSC to support the PARPA. Thus the bilateral donors were in the forefront of the development of a systematic approach to GBS.

The origin of PGBS 3. The first “act of creation” appears to have been a donor-led initiative. It began in 1998 with a Joint Review of BOP support by the “Gang of Four” (G4): Denmark, Norway, Sweden and Switzerland. BOP support averaged USD 50m in the late 1990s and the G4 were increasingly committed to harmonising and coordinating their BOP support, since this would improve fiscal management and the transparency of budget support, and reduce transaction costs for both government and donors. 4. The Joint Review by the G4 was led by a member of Danida’s technical advisory services with three consultants and supported by a reference group from the G4 embassies. Its main concern seems to have been to reduce the administrative burden on government created by the different procedures of donors offering SBS and GBS. It assessed Mozambique's macroeconomic performance, revenues, PFM reforms, foreign exchange allocation model, and public sector reforms. It proposed that the donors should seek to standardise agreements for BOP support, adopt a two-pronged strategy of both GBS and SBS, set joint conditionalities, conduct joint annual reviews (JARs) and allocate funding on a multi-annual basis. A follow-up review was undertaken nine months later in 1999 with the participation of the UK. Similar analyses of Mozambique's performance and readiness were undertaken and the joint donors concluded by suggesting that donors and government:

Develop and implement a concept of a single facility for general budget support with a common set of conditions … and common disbursement, accounting, reporting and auditing procedures. Similar efforts should be undertaken in cases of sector support and sector-specific import support (Aide Mémoire 1999: 5).

5. The question of whether GBS or SBS was more fungible in the context of deficient accounting and audit systems was “controversial” but it was resolved that the two were complementary. This remains a matter of discussion. However, it should be noted that, while GBS was the focus of the proposal, the donors were expressly seeking an "optimal mix" of the two modalities.


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The first framework agreement 6. Coordination of GBS was agreed in 1999 and formalised in 2000 as a “common framework agreement” in a Joint Donor Programme for Macro-Financial Support between the GOM and bilateral donors. An original group of six donor signatories rapidly expanded to nine – Belgium, Denmark, the EC, Ireland, the Netherlands, Norway, Sweden, Switzerland and the UK – and France joined in 2002. 7. With regard to policy conditionality, the agreement required the government to prioritise poverty reduction according to the PARPA, and made Mozambique's “on-track” status the basis for judgement about the quality of macroeconomic management. However, signatories retained the right to add their own policy conditions. 8. The agreement set out mechanisms of government–donor coordination and dialogue which remain important, including:

(a) quarterly reports on the financial execution of the Joint Donor Programme and on budget execution;

(b) annual audit reports of the financial records of the Joint Donor Programme, of government budget execution and of the value for money performance of funds spent;

(c) an annual “joint donor review” of the Programme in collaboration with the government, on the basis of which donors agreed a disbursement schedule.

The 2002 crisis 9. The 2000 agreement ran into difficulties relating to the (un)predictability of the GBS programme that was at the core of the government's finances, funding around 18% of its recurrent expenditure in 2001. This was partly a matter of the “mechanics” of donor behaviour: while they disbursed into a common account, their individual timing for doing so was uncertain. But it was also a matter of donor interpretation of the conditions for disbursement. This was highlighted when, in response to the banking crisis of 2001 and associated violations of human rights, in 2002 some donors temporarily withheld or threatened to withhold disbursement. In the face of the damaging effect of unpredictability on macrofinancial management, the government (supported by the IMF) asked that the conditions for disbursement should be set out more transparently.

The 2004 Memorandum of Understanding 10. The second “act of creation” was a new MOU signed in March 2004 by the government with 15 external partners (Programme Aid Partners – PAPs): the earlier 10, Finland and the World Bank4 (which had joined in 2003), Germany, Italy and Portugal. Observing external partners included Canada and Spain (which joined in 2004 and 2005 respectively), Japan, the USA, the UN, IMF and the AfDB. Between 2002 and 2004, a major part of the dialogue between government and the PAPs was about generating a common perspective that could be enshrined in the new MOU. Following a joint workshop in November 2003, the draft MOU was passed by the government's Economic Council and the Council of Ministers before being signed jointly with the donors.

4 The World Bank is committed to using the Joint Review process as the main evaluation and reporting mechanisms for its Poverty Reduction Support Credit (PRSC). But until 2005 it maintained its own assessment matrix.


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11. The main rationale for the new agreement was: To clarify further the roles of both government and donor agencies, and to build a more effective partnership-based approach to supporting the government's poverty reduction strategy. (Harding and Gerster 2004: 8)

12. The 2004 MOU was much more explicit than the earlier agreement. It agreed that the shared overall objective was "to contribute to poverty reduction in all its dimensions by supporting the evolution, implementation and monitoring of the PARPA". Intermediate objectives were:

• To build a partnership based on “frank and open dialogue” about the PARPA and the budgetary and planning instruments for operationalising it;

• To provide "financing for poverty reduction, clearly and transparently linked to performance, in a way which improves aid effectiveness and country ownership of the development process, reduces transaction costs, allows allocative efficiency in public spending and predictability of aid flows, increases the effectiveness of public administration, improves monitoring and evaluation and strengthens domestic accountability".

13. The MOU set out the objectives, principles and commitments, processes for reporting, monitoring and dialogue, and the dispute resolution and disbursement processes. Most significantly it defined:

(a) Government's commitment to “underlying principles” or conditions of the agreement:

– peace and democratic political processes; – independence of the judiciary, and the rule of law; – Human rights; – good governance and probity (including anti-corruption) in public life; – combating poverty consistently with PARPA objectives; – sound macroeconomic policies, with reference to IMF programme “on-

track” status. This was the basis for addressing the government's uncertainties about when and why disbursements might be withheld. A central tenet is that, once funds are committed on the basis of the previous year's performance, disbursement should follow as scheduled unless there has been a breach of the underlying principles. The commitment of funds in advance of the preparation of the following year's budget means that they can be programmed into the government's expenditure plans. The dialogue and dispute processes would be expected to ensure that withholding of disbursement would not occur in the current year, and would not lead to a collective donor decision not to disburse.

(b) The use of a PAF as the shared instrument for dialogue, for assessing government's performance in the previous year and for donors' support commitments for the following year. The PAF crystallises government priorities across the PARPA into measurable indicators (see the 2005 PAF at Annex 7).

(c) PAPs' commitment to alignment on government systems, predictable funding, transparent conditions, harmonisation and capacity building.

(d) Mechanisms to strengthen domestic accountability: (i) the PAF is reported annually and appended to the government's PES which is reported to parliament; (ii) the PAPs are committed to reporting to government on their performance against their commitments, as the basis for joint assessment.


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The evolution of the mechanisms of dialogue Review process and calendar 14. In addition to these formative agreements, the government and partners also go through a Joint Review (formalised in the MOU) which allows the continuous evolution of the dialogue. The review process is scheduled to coincide with the government's own fiscal year (based on the calendar year):

• April/May: Annual Review of performance over the previous financial year against the government's PES, the PAF and the state budget. The review leads to a joint Aide Mémoire describing performance and issues for the forthcoming year. The joint assessment of performance is the basis for donors' commitments for funding in the following year. Commitments are indicated within four weeks of the end of the annual review, to be in time for the budget process, and confirmed by 31 August.

• June: follow up meeting. • August/September: The Mid-year Review focusing on setting the indicators and

targets for the following year's PAF. The review also discusses GOM plans for next year based on the PARPA, the MediumTerm Fiscal Framework (MTFF), headline information on the PES and budget and the PAF matrix. Progress of the government in year, is discussed on the basis of the budget execution report, the PAF and other available information. A discussion is also held on PAP commitments for improving aid effectiveness.

• December: follow-up meeting. • A joint Budget Working Group meets, in combination with these review meetings,

to discuss budget execution and donor disbursement schedules. • A Poverty Observatory of government, donor and civil society (CS) representatives

has been set up to meet annually at the time of the annual review.

Forums for dialogue 15. The coordination of donors depends on an organisational structure and meetings scheduled partly to coincide with the review process:

• Heads of Cooperation (HOC) meet monthly to discuss performance against the PAF and the commitments of the PAPs.

• A “Troika plus” group, consisting of the previous, present and future chairpersons of the PAPs plus the EC and the WB meets fortnightly and is mandated to act on behalf of the HOC. Effectively this is the donors' lead group and includes the larger donors. It periodically meets with government in a Joint Steering Committee to discuss and agree on key strategic issues related to the implementation of the MOU and the monitoring of the PAF.

• An Economists Working Group meets fortnightly to analyse performance and implementation for the HOC.

• Working groups on specific aspects of policy (22 at the time of the annual review in May 2005) are active throughout the year. They are joint with the government and open to all donors, including those who are not signatories of the MOU. Each has two co-leaders from government and donors.

• The working groups are clustered into thematic groups that report to the annual and mid-year reviews. At the time of the 2005 annual review, there were six thematic groups on poverty and growth, PFM, governance, private sector development, service delivery, MOU implementation and aid effectiveness. Cross-cutting groups on gender, HIV/AIDS and environment report separately.


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• A PAF Coordination Group meets monthly to discuss performance and prepare for dialogue with government. It includes the “Troika plus” group, and chairs of the sector and cross-cutting groups.

The partners 16. All the large donors and many of the smaller bilaterals now participate (even if only as observers) in the principal donor grouping – now the Group of 17 (G17) – that have joined together to provide GBS. 17. While it is dangerous to caricature complex positions, the G17 could be described as containing four broad postures:

(a) The UK, in particular, and probably also the Netherlands and the EC, have the clearest commitment to rapid progress towards GBS as their leading strategy. While they have sector programmes, this first group is concerned that support to sector budgets might stand in the way of unification in the national budget – "We can only improve the budgetary system by using it." The country office of Belgium is probably in this category, but it faces reservations from its headquarters.

(b) The WB initially disbursed its PRSCs on the basis of a separate performance matrix (also based on PARPA but distinct in its measures from the PAF). From 2005, it will fully align with the PAF matrix and the MOU procedures, and will henceforth describe this as a GBS programme rather than a BS programme.

(c) The Nordic states, Switzerland, Ireland and France argue for a “building blocks” approach in which GBS and SBS go hand-in-hand towards a future in which both are integrated into a national financial management system. The concern of this second group is that too rapid a commitment to GBS will stretch the capacity of government ministries and present problems of fiduciary risk to donors.

(d) Some members of G17 – for example, Germany, Portugal, Italy, Canada and Spain – have initially made small contributions, gaining a seat at the table from which their position may evolve. Several of these have negotiated with their headquarters in order to have the freedom to participate in the G17 as a pilot case.

18. Outside the G17:

(a) Two major donors – the USA and Japan – collaborate with the Group, coordinating aspects of their aid and participating in some working groups without contributing to BS. USAID has considered the possibility of joining (USAID 2004) but rejected it mainly on grounds of fiduciary risk and because participation in GBS was not considered to be the best way of exercising influence in matters of concern to the USA – e.g. business competitiveness, private sector development, decentralisation, and health (where Congress requires funding to be only through projects). The Japanese Government, which offers IS and food aid as well as project aid, is currently considering its position. In the meantime it aims to work within the same frameworks as the G17.

(b) UNDP is at the centre of another instrument of donor collaboration – the Development Partners Group (DPG). Under the DPG, there is a monthly Heads of Mission meeting, chaired by UNDP or the WB, and a series of specific working groups reflecting donor interests. However, the working groups have now largely been subsumed into the activities of the G17, and UNDP intends to recognise this by dissolving its separate arrangements.


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Split tranches 19. One other distinction of design between G17 donor partners should be mentioned here. Based on the joint assessment of performance (but introducing their own separate judgement if necessary), most donors make a single decision about their commitment. However, the EC, Switzerland and Sweden operate “split-response” mechanisms with a fixed tranche committed as in the case of the other donors, and variable tranches paid against specific PAF criteria. Sweden is to cease to operate this mechanism. 20. The donors that have insisted on disbursement by tranches have tended to favour clear output or outcome indicators that leave no room for interpretation if targets are missed, arguing that a focus on results leaves the government free as to how to achieve them (European Commission 2005). The problem is that such targets (focused on social sectors) are not fully under the control of government which will, nevertheless, suffer the consequences of an automatic deduction (Foster 2002: 28). By contrast, most donors favour policy and process indicators (of reforms undertaken) on the grounds that these are fully under the control of government (Gerster 2005: 22).


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Table 3C.1: GBS/PRSC/PRGF Recommendations, Structural Conditionalities and Benchmarks, and Prior Actions over Time

A. IMF – ESAF to PRGF

ESAF (1990–95) USD 26.10m The programme for 1990–995 was focused on: 1. Reducing macroeconomic imbalances. Liberalisation of the exchange rate, prices, and interest rates. Trade policies. Enterprise and financial sector reforms. ESAF (1996–99) USD 75.92m Medium-term strategy 1. General objectives: raise gross domestic savings and improve the allocation of resources in order to create conditions for sustained economic growth and poverty reduction. 2. Macroeconomic objectives: (a) achieve real GDP growth of 4% by 1998; (b) reduce inflation to 10% by 1998; (c) increase international reserves to the equivalent of 4 months of imports by 1998. 3. Fiscal objectives: (a) reduce fiscal deficit (before grants) to 16.5% of GDP by 1996 through revenue and expenditure measures; (b) increase revenue by 1.9% of GDP through acceleration of customs reform and an increase in petroleum product taxes with a commensurate reduction in overall expenditure. Structural reforms 1. Focus on privatisation. 2. Financial sector reforms. 3. Export promotion. 4. Strengthening the revenue base. 5. Public administration reforms – including decentralisation and civil service reform. This includes promoting greater transparency and accountability in public finances and in the economic regulatory system. 6. Strengthening of the judicial sector. Addressing social costs 1. Development of the agricultural sector through market incentives. 2. Review of the existing social safety nets. 3. Development of a Poverty Assessment and Action plan. 4. Expansion of primary and secondary education. 5. Expansion of primary health care. PRGF (1999–2003) USD 87.0m Medium-term strategy 1. General objectives: (i) create the conditions for poverty-reducing sustainable economic growth while lowering the country’s dependence on external aid: (ii) capitalise on gains achieved in both macroeconomic stabilisation and economic liberalisation to encourage rapid private sector expansion. 2. Macroeconomic objectives: real GDP growth 7%, end-period inflation 6–8% and net international reserves at 3 to 4 months of projected imports.


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Structural policies 1. External sector: (i) rationalisation of import tariffs; (ii) improvement of efficiency of utilisation of aid funds, reduction of debt-service burden. 2. Pricing policy: ensure viability of industries with regulated prices. 3. Fiscal policy: (i) improve efficiency of financial management; and (ii) improve revenue mobilisation and tax reform. 4. Governance and public administration: (i) improve accountability; (ii) reform civil services; (iii) decentralise public administration; and (iv) support the electoral process. Monetary policy: (i) Financial market development; (ii) central bank information base; (iii) interest rate policies; and (iv) payments system. Financial sector reforms: (i) improve monetary control and the health of the financial sector. Private sector development: (i) improve business environment. Public enterprises: (i) restructure public enterprise sector. Energy policy: (i) promote development of energy resources. Agricultural policy: (i) improve allocation and monitoring of sectoral resources; and (ii) raise income and security of the poor. Social policy: (i) rebuild health system in rural areas; (ii) improve quality of primary and secondary education; (iii) improve targeting and effectiveness of poverty reduction programmes; and (iv) improve food security. Environmental policies: (i) improve the regulatory environment; and (ii) improve water and sanitation. Transport and telecommunications: (i) eliminate road transport bottlenecks; and (ii) increase private sector participation. Statistics: (i) improve quality of statistics; and (ii) improve dissemination of statistics. PRGF (2004–06) USD 16.6m Medium-term strategy 1. General objectives: consolidating macroeconomic stability and addressing remaining structural weaknesses to sustain and broaden growth, promote employment creation, and further reduce poverty. 2. Macroeconomic objectives: real GDP growth of 8%, year-end inflation of 11% for 2004 and 7% for 2005.

2003 Prior actions 1. Terms of reference prepared for diagnostic review of large banks. 2. Quarterly budget execution reports produced in less than 45 day of end of period. 3. GOM provides the Fund with data on monthly government revenues.

Structural benchmarks 1. Amendments to the Financial Institutions Law submitted to parliament. 2. Implementation of plan for Central Revenue Authority. 3. Submission of the Organic Law for Tax Tribunals to the Assembly of the Republic.

Structural measures 1. Progress in development of integrated financial management programme. 2. Develop computerised system for registration of personal and corporate income tax payments. 3. Develop a timetable for implementing loan-loss provisioning standards. 4. Approval by the Council of Ministers of a new statute transforming DNIA (National Directorate for Taxes and Auditing) into a general directorate. 5. Issue instructions to financial institutions for practical steps for consolidated supervision. 6. Issue instructions to financial institutions detailing the practical steps for consolidated supervision. 7. Implement the pilot SISTAFE in MOF and Ministry of Education and Culture (MEC).


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2004 Structural performance criteria 1. Submit to the Assembly of Republic draft general tax law. 2. Strengthen the balance sheet of the BOM. 3. Keep in place the current supervisory regime for BOM until approval of financial statements. Structural benchmarks 1. Submit to the Assembly of the Republic the draft law creating the Autoridade tributaria. 2. Complete the revision of the regulatory framework for microfinance activities. 3. Initiate the implementation of the three-year programme to strengthen balance sheets of the BOM. 4. Prepare budget execution reports on the basis of the accounting generated by the e-SISTAFE (Integrated System for State Financial Management) using new budget classifier. 5. Develop timetables to move gradually to IFRS. 6. Issue regulations of the anti-money-laundering law and establish financial investigations unit. 7. Implement the SISTAFE in the MPF, including provincial directorates. 2005 Structural performance criteria 1. Issue government securities to strengthen balance sheet of BOM. 2. Maintain current supervisory regime for BOM. Structural benchmarks 1. Introduce foreign exchange auctions 2. Develop timetables to move gradually to IFRS in the commercial banking system and comply with international best practices on loan classification and provisioning. 3. Approve the internal regulations and the statute for the staff of the DGI. 4. Prepare the budget execution reports on the basis of the accounting generated by the e-SISTAFE, using new budget classifier. 5. Roll out the SISTAFE to the MEC and abolish the disbursement of funds. 6. Compile and disseminate preliminary data on the 2004 GDP by various approaches and disseminate final national accounts data.


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B. PGBS (Macrofinancial Aid to GBS)

Macrofinancial Aid: 2001 Key areas for reform and recommendations from Joint Donor Review (JDR): Macroeconomic and Financial Environment 1. Macroeconomic stability: (i) create conditions for a strong broad-based economic growth; (ii) control inflation rate and stabilise exchange rate; and (iii) set an appropriate post-HIPC debt strategy. PRSP (PARPA) 1. Improve growth strategy and develop a more effective contingency mechanism to reduce the vulnerability of the economy to chronic shocks. 2. Improve the consultation process by fully involving the private sector, civil society in general and Assembly of the Republic. 3. Impact of AIDS on the macroeconomic and future growth prospects, human resources development and public sector capacity to delivery services. 4. Monitoring and evaluation: clear identification and selection of key performance indicators, which will facilitate assessment of policy and the impact on poverty reduction. 5. Building monitoring capacity. Set up a monitoring and evaluation mechanism, both within the government and through an independent specialised academic or other institution. Financial Management Reform 1. Follow recommendations of Public Expenditure Review (PER), Country Financial Accountability Assessment (CFAA), Report on Observance of Standards and Codes (ROSC), Joint Donor Review (JDR). 2. Consolidate Technical Unit for Reform of State Financial Administration (UTRAFE), TA to the MPF. 3. Legal instruments: Public Finance Law and complementary legislation and regulation. 4. Implementation of the new budget classification. 5. Integration of various planning and budgeting instruments: PARPA, MediumTerm Fiscal Framework (MTFF), Economic and Social Plan (ESP) and the state budget. 6. Comprehensive time-bound action plan that will include: a plan to co-ordinate activities in different directorates and government entities in terms of substance, timing and benchmarks; assessment of capacity to implement the new regulations; assessment of the need for financial and human resources. 7. Integration of off-budget funds into the budget, including some government and donor funds. This issue could be the subject of a thematic study. Revenue Mobilisation 1. Revise tax system and strengthening tax administration, paying particular attention to the issues of equity, transparency and efficiency. 2. Broadening the tax base. 3. More transparent and predictable tax regulations. This should in particular be taken into account in the development of the legislation on tax exemptions. Code on Fiscal Incentives. 4. Strengthening the implementation capacity of tax administration and analytical and policy-formulation capacity. Public Sector Reform Implement public sector reform to ensure effective implementation of the PARPA.


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Banking Sector Financial situation (banking solvency problems): (i) define implications for the state budget and its impact on poverty reducing activities; (ii) implement proper and sustained legal action in relation to the recovery of non-performing loans; iii) strengthen management, supervision and regulation of financial institutions; 4) minimisation of government exposure to contingency liabilities; and 5) deepening of the dialogue with the government on banking issues. Macrofinancial Aid: 2002 Key areas for reform and recommendations from JDR:

Macroeconomic and Financial Environment 1.Elaboration and clarification of Growth Strategy including risk factors, e.g. HIV/AIDS, exogenous shocks, build-up of contingent liabilities in by the public sector. PRSP (PARPA) 1. Elaboration and clarification of Growth Strategy including risk factors e.g. HIV/AIDS, exogenous shocks, build-up of contingent liabilities in by the public sector. 2. Updating of PARPA. 3. Development of annual benchmarks. 4. Strengthening of linkages between M&E system and line ministries. 5. Development of an Information system to reinforce compatibility with PARPA monitoring matrix and support harmonisation with ESP indicators. Formalise links between PARPA and ESP. 6. Harmonisation of M&E process to avoid parallel arrangements and discussion of scope for linking process with annual CG. 7. Establishment of PARPA observatory. 8. Strengthening of independent PARPA-related research. 9. Develop bottom-up approach to M&E at provincial and district levels. 10. Increase public access to PARPA-related information. 11. Increase national dialogue on poverty and gender issues.

Financial Management Reform 1. Improvement of integration between planning instruments. 2. Improvement in budget comprehensiveness including off-budget donor financing and government ‘receitas proprias’. Incorporation of off-budgets into new financial management systems. 3. Strengthening of process of decentralisation to achieve better prioritisation and implementation at sector, provincial and district levels. 4. Review of objectives and operations with MPF of five sector programmes and institutionalisation of the budget cycle and streamlining through preparation of generic terms of reference for sector working groups. 5. Coordination of relationship and funding agreement between UTRESP (Technical Unit for Public Sector Restructuring) and UTRAFE. 6. Development of UTRAFE work plan to serve as a basis for coordinating technical assistance and the monitoring of consistency of indicators in the PRGF and the PER. 7. Clarification and elaboration of full implications of SISTAFE for line ministries at provincial and district levels. Improved efforts by MPF to ensure that parallel efforts in line ministries are in line with SISTAFE. 9. Implementation of SISTAFE seminar with donor community to assist in overall coordination efforts, and look into technical issues such as proposed Conta Unica with Banco de Mozambique. A discussion is needed to clarify and manage potential risks in rationalising the payments system. 10. Minimise fiduciary risk relating to financial management in Mozambique, as identified by CFAA and PER. Problems to be addressed over the medium term under SISTAFE.


(210)

Revenue Mobilisation 1. Implementation of new tax law system. 2. Upgrading of capacity and strengthening analytical and policy formulation capacity within the tax administration is critical, including provision of necessary information technology (IT). Continued and intensified training for tax officials and the private sector, and improved dissemination of public are needed. 3. Study the social impacts of fiscal instruments. A Poverty and Social Impact Assessment (PSIA) on the effects of the petroleum taxes is being undertaken and will help provide a basis for more general incidence studies. 4. Handover of a modern, sustainable customs department achieved in line within agreed strategy. 5. Finalisation of a Customs tribunal and the related legislation. Programme Implementation 1. Implementation by National Directorate Treasury (DNT) and Central Bank (CoB) of technical problems identified by auditing firm. 2. Improved communication between GBS donors and government. 3. Improved predictability of flow of disbursements in line with budget cycle. 4. Streamlining of bilateral agreements including conditionalities and length of agreements. 5. Revision of Joint Agreement to reflect experience gained to date. 6. Development of mechanism in Joint Agreement to address non-fulfilment of government commitments. 7. Guidelines to clarify scope of work to be undertaken. 8. Formalisation of PARPA against PRGF implementation as primary reference for assessing Joint Programme (JP). 9. Improvement of administrative procedures to improve predictability of disbursements. Banking Sector 1. Financial situation (banking solvency problems): (i) define implications for the state budget and its impact on poverty reducing activities; (ii) implement proper and sustained legal action in relation to the recovery of non-performing loans; iii) strengthen management, supervision and regulation of financial institutions; 4) minimisation of government exposure to contingency liabilities; and 5) deepening of the dialogue with the government on banking issues. 2. Implementation of the agreed measures transparently and efficiently. 3. Improved information flows from government to G10 on progress of agreed measures. Substantial and equitable loan recovery and publishing of collections in budget execution report. 4. Withdrawal of government equity shares from banking system within 18 months. 5. Banking supervision department has control over banking sector including non-financial institutions. 6. Continued strengthening of bank supervision department using full extent of powers to undertake its mandate.


(211)

GBS 2003–05 - The annual Joint Review is based as of 2003 on the work of 20 working groups, distributed over five thematic groups, completed detailed reviews in assigned areas. The first thematic group focused on (i) growth and macroeconomic stability; (ii) poverty; and (iii) monitoring and evaluation (M&E) systems. The second thematic group focused on public financial management (PFM) and included teams reviewing (i) taxation; (ii) budget formulation, execution and reporting; (iii) procurement; and (iv) the integrated financial management information system (SISTAFE). The third thematic group focused on governance and included teams reviewing (i) public sector reform, decentralisation and corruption; as well as (ii) legal and judicial reform. The fourth thematic group focused on private sector development and included teams reviewing (i) the financial sector; (ii) the investment climate; (iii) agriculture and rural development; (iv) the environment; (v) telecommunications; air and rail transportation; (vi) road transportation; and (vii) energy. The fifth thematic group focused on service delivery and included teams reviewing (i) HIV/AIDS; (ii) health care; (iii) education; and (iv) water and sanitation. - Recommendations are also made from the Joint Review but do not constitute strict conditionality. - Conditionality has been extended to donor performance since 2002 but only formalised in the 2005 PAPs’ PAF. Selection of Priority Indicators (PAF/PRSC [2005] agreed conditionalities)

1. Poverty reduction through privileged focused populations: areas and sub-areas (education [primary education], health [mother and child, malaria], HIV/AIDS [National Council to Combat Aids – CNCS], infrastructures [roads, water, sanitation]). 2. Promotion of economic development with priority for the rural areas and reduction of regional imbalances: areas and sub-areas (agriculture [trading, natural resources]). 3. Creation of an enabling environment for the action of the private sector: areas and sub-areas (ad hoc legal reforms, macroeconomic and financial policies [financial system, SISTAFE reform, tax reform procurement, and planning and monitoring]). 4. Creation of an enabling environment for the action of the private sector: areas and sub-areas (good governance, legality and justice [fight against corruption], public sector reform). 5. Consolidation of peace, national unity, justice and democracy: (good governance, legality and justice [fight against corruption], justice reform).


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World Bank PRSC1 : 2004 Focus areas: The focus areas of PRSC I are cross-cutting. Macroeconomic stability Building the public sector capacity and accountability though public finance reforms, including the design and implementation of a new integrated electronic financial management system (SISTAFE), budget comprehensiveness, improved accounting and accountability, strengthened internal controls, reform of the procurement process, and improved linkages between budgeting, planning and the delivery of services, decreasing aid dependency and strengthening monitoring and evaluation. Enhancing the efficiency of the delivery of services through civil service reforms in health, education and water and sanitation. Enhancing the investment climate for private sector development including reforms of the financial sector, improving the regulatory environment and expanding infrastructure services. NB: The PRSC and PGBS The WB found the constraints of the MOU and the slimmed-down PAF of 50 indicators to be too restrictive. Therefore the Bank’s PRSC1 contained a Programme Matrix that was different from the PAF, even though the Bank had signed the MOU in 2004. World Bank PRSC 2 : 2005–06 (2nd tranche PRSC) The PRSC 2 conditions are based on the government’s PAF matrix. The focus areas of PRSC 2 are cross-cutting institutional reforms in line with PRSC 1. Prior actions: PRSC 2 prior actions and second-tranche conditions are drawn from the government’s PAF matrix. Specific prior actions are: 1. Public sector capacity and accountability: (i) MOF will implement e-SISTAFE in the Ministry and its provincial directorates; (ii) the Council of Ministers will approve a new procurement decree that brings public procurement processes in line with international practice. 2. Improving the investment climate: (i) the government will present a new Financial Institutions Law to the Assembly of the Republic; (ii) making the hiring of foreign labour more flexible; and (iii) the government will present a new Commercial Code to the Assembly of the Republic. 3. Expansion of service delivery: 65% of budget expenditure to priority areas. Priority sectors have targets and indicators in the PAF for monitoring of this prior action (see PRSC results framework). Key reforms: i) roll-out of e-SISTAFE to MOF and MEC; extension of budget coverage; a new procurement code based on international standards ; a new financial institutions law, a new commercial code, a decree to ease restrictions on hiring foreign labour, and new laws to simplify red tape and strengthen anti-corruption measures. Triggers: there are no sector specific triggers. Only cross-cutting triggers.

Ann

ex 3

C: T

he D

esig

n of

PG

BS

in M

ozam

biqu

e

(213

)

C. P

RSC

Res

ults

Fra

mew

ork

P

RS

C1

Str

ateg

ic O

bjec

tives

Are

asS

ub-a

rea

Ob j

ectiv

esA

ctio

ns20

0420

0520

0620

07

Mat

erna

l mor

talit

y re

duce

dIn

crea

se o

ffer o

f obs

tetri

c ca

reP

ropo

rtion

of i

nstit

utio

nal

deliv

erie

s am

ong

expe

cted

birt

hs3

47%

49%

51%

51%

Infa

nt m

orta

lity

redu

ced

Incr

ease

cov

erag

e of

the

Ext

ende

d V

acin

atio

n P

rogr

amm

eT

cov

erag

e <1

year

DP

T3

e H

B4

97%

95%

95%

95%

Incr

ease

acc

ess

to b

asic

he

alth

ser

vice

sS

prea

d ac

cess

to q

ualit

y tre

atm

ent

of tr

ansm

itted

and

non

-tran

smitt

ed

dise

ases

Util

isat

ion

rate

- co

nsul

tatio

ns p

er

inha

bita

nt p

er y

ear

50.

910.

930.

940.

95

HIV

-Aid

sM

ISA

U/

CN

CS

Pre

vent

ion

and

miti

gatio

n of

the

impa

ct

of p

eopl

e in

fect

ed a

nd

affe

cted

by

HIV

-Aid

s

Red

uctio

n of

ver

tical

tran

smis

sion

# H

IV+

preg

nant

wom

en

and

neon

ates

rece

ivin

g P

MT

CT

Pro

phyl

axis

680

0015

000

2500

035

000

Reh

abili

tate

and

impr

ove

the

natio

nal n

etw

ork

Km

s. re

habi

litat

ed9

813

1091

705

Km

s. P

erio

dic

Mai

nten

ance

1013

9216

3520

01

Km

s. R

outin

e M

aint

enan

ce11

1357

814

343

1524

7

Wat

erA

cces

s In

crea

sed

Ope

n w

ell a

nd m

ake

new

co

nnec

tions

% P

opul

atio

n w

ith

acce

ss to

pot

able

wat

er12

41%

44.2

0%45

.80%

Agr

icul

tura

l S

ervi

ces

Pro

mot

ion

of a

gric

ultu

ral

prod

uctio

nIn

crea

se c

over

age

of a

gric

ultu

ral

outre

ach

serv

ices

% o

f far

mer

s as

sist

ed

expl

orat

ions

that

ado

pted

at

leas

t one

new

te

chni

que

durin

g th

e la

st

12 m

onth

s

1420

%28

%30

%32

%

Man

gem

ent

of N

atur

al

Res

ouce

s

Acc

ess

to la

ndS

impl

ify m

echa

nism

s of

obt

aini

ng

the

right

s fo

r lan

d te

nure

% o

f pro

cess

es re

ceiv

ed

that

are

aut

horis

ed in

90

days

1890

%92

%95

%

Pri

oriti

esIn

dica

tors

Ref

eren

ce

No.

to P

AF

PR

SC

2+

Edu

catio

nP

rimar

y ed

ucat

ion

Uni

vers

al e

duca

tion:

-in

crea

se a

cces

s an

d re

tent

ion

-incr

ease

qu

ality

of e

duca

tion

-re

duce

gen

der

disp

ariti

es

App

rove

, im

plem

ent a

nd a

sses

s th

e st

rate

gic

plan

for 2

005-

2009

-impl

emen

t the

pro

gram

of l

ow

cost

ach

ool c

onst

ruct

ion

-Impl

emen

t the

stra

tegy

of

teac

hers

form

atio

n ta

king

into

ac

coun

t the

new

cur

ricul

um

-A

ppro

ve a

nd im

plem

ent t

he

gend

er s

trate

gy

EP

1 ne

t enr

olm

ent r

ate

- to

tal

EP

1 ne

t enr

olm

ent r

ate

- gi

rls

EP

1 co

mpl

etio

n ra

te -

tota

l

EP

1 co

mpl

etio

n ra

te -

girls

Gov

ernm

ent P

rogr

am -

PA

RP

A

48%

58%

66%

36%

41%

52%

62%

77%

81%

84%

86%

83%

79%

Pov

erty

redu

ctio

n th

roug

h pr

ivile

ged

orie

ntat

ion

of p

ublic

se

rvic

es to

the

mos

t ne

edy

popu

latio

n

Pro

mot

ion

of e

cono

mic

de

velo

pmen

t, w

ith

prio

rity

to th

e ru

ral a

reas

an

d re

duct

ion

of th

e re

gion

al u

nbal

ance

s

72%

69%

43%

1a 1b 2a 2b

Agr

icul

ture

and

R

ural

D

evel

opm

ent

Mot

her &

C

hild

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lth

Impr

ove

the

exec

utio

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oved

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a-st

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ures


(214)


(215)

Annex 3D: Additional Donor Information

Box 3D.1: Bilateral and Multilateral Donors in Mozambique Bilateral Donors Multilateral Donors/Lenders 1. Australia 2. Austria 3. Belgium* 4. Canada** 5. China 6. Denmark** 7. Finland** 8. France (Service de Cooperation

Française: SCF/French Development Agency: AFD)*

9. Germany (Deutsche Gesellschaft für Technische Zusammenarbeit – GTZ/ KfW)*

10. Generalitat Catalunya 11. Iceland 12. Ireland* 13. Italy* 14. Japan 15. Netherlands** 16. Nigeria 17. Norway* 18. Portugal* 19. South Africa 20. Spain* 21. Sweden** 22. Switzerland** 23. UK* 24. USA Several other partners including: Arab countries, Brazil, Cuba, India, Korea, Yugoslavia, Madagascar, Mauritius, Malawi, New Zealand, Luxembourg, Poland, Russia, Tanzania, Zambia, Zimbabwe.

1. African Development Fund (AfDB)/African Development Fund (AfDF)

2. Arab Bank for Development in Africa (BADEA)

3. International Development Association (IDA)

4. Inter-American Development Bank (IADB)

5. EC* 6. European Investment Bank (EIB) 7. International Fund for Agricultural

Development (IFAD) 8. IMF 9. Kuwait Fund (KF) 10. Nordic Development Fund (NDF) 11. Organization of the Petroleum Exporting

Countries (OPEC) 12. WB* United Nations Agencies: 13. Food and Agriculture Organization (FAO) 14. UN Capital Development Fund (UNCDF) 15. UN Development Programme (UNDP) 16. UN Educational, Scientific and Cultural

Organisation (UNESCO) 17. UN Population Fund (UNFPA) 18. UN High Commissioner for Refugees

(UNHCR) 19. UN Children’s Fund (UNICEF) 20. UN Industrial Development Organization

(UNIDO) 21. UN Technical Assistance (UNTA) 22. UN Volunteer Programme (UNV) 23. World Food Programme (WFP) 24. World Health Organization (WHO)

Source: based on Ministry of Planning and Finance, Development Cooperation Ireland (DCI) 2001 in Francisco (2002) Note: ** the original “like-minded group”; * the current Group of 17.

Gen

eral

Bud

get S

uppo

rt in

Moz

ambi

que

(216

)

Box

3D

.2: D

onor

Invo

lvem

ent i

n D

iffer

ent A

id M

odal

ities

GB

S B

OP

SBS

Bas

ket f

undi

ng

Proj

ect a

id

Oth

er (p

leas

e sp

ecify

) B

elgi

um

Yes

No

Yes

(Pro

gram

a de

R

eabi

litaç

ão P

os-

Em

erge

ncia

[Saú

de])

Yes5 (S

ISTA

FE to

be

sign

ed in

Jun

e 20

04)

Yes

(3 p

roje

cts

on fo

od

secu

rity

– B

elgi

an

Sur

viva

l Fun

d)

Yes

(Stu

dy F

und

[to b

e si

gned

], TA

, lo

cal

scho

lars

hips

, m

icro

-pro

ject

s)

Den

mar

k Ye

s N

o Ye

s Ye

s Ye

s Ye

s (C

S, h

uman

itaria

n su

ppor

t) E

C

Yes

No

Yes

Yes

Yes

Yes

1-

NG

O p

roje

cts

2-

Fis

herie

s ag

reem

ent

3- T

rade

pre

fere

nces

4-

Tra

de-r

elat

ed c

apac

ity b

uild

ing

5-

Em

erge

ncy

aid

6- S

uppo

rt re

gion

al in

itiat

ives

(suc

h as

Afri

can

Uni

on)

Finl

and

Yes

No

Yes

No

Yes

Yes

(NG

O s

uppo

rt)

Fran

ce

Yes

No

Yes

No

Yes

No

Ger

man

Ye

s N

o Ye

s N

o Ye

s N

o Ire

land

Ye

s -

Yes.

GB

S +

SB

S =

17%

Ye

s –

49%

Yes

– 30

% (p

rovi

ncia

l sup

port,

Nia

ssa

and

Inha

mba

ne)

Italy

Ye

s Ye

s Ye

s N

o Ye

s N

o N

ethe

rland

s Ye

s N

o Ye

s Ye

s Ye

s Ye

s (“

Oth

er” d

epen

ds v

ery

muc

h on

def

initi

on o

f “pr

ojec

t ai

d”; i

t mig

ht in

clud

e: d

iffer

ent i

nves

tmen

t sup

port

prog

ram

mes

; Dut

ch N

GO

s su

ppor

ting

partn

er

orga

nisa

tions

) N

orw

ay

Yes

No

Yes

(hea

lth)

Yes

(pub

lic s

ecto

r re

form

, hea

lth, S

ISTA

FE)

Yes

No

Por

tuga

l –

star

ted

2004

Ye

s N

o N

o N

o Ye

s Ye

s (d

ebt r

elie

f)

Sw

eden

Ye

s N

o Ye

s Ye

s Ye

s Ye

s (h

uman

itaria

n, N

GO

, priv

ate

sect

or)

Sw

itzer

land

Ye

s N

o Ye

s (h

ealth

) Ye

s (h

ealth

and

de

cent

ralis

atio

n pl

anni

ng, w

ater

)

Yes

(rur

al d

evel

opm

ent,

mun

icip

aliti

es, w

ater

, ca

paci

ty b

uild

ing)

Yes

(NG

Os)

UK

Ye

s N

o Ye

s Ye

s Ye

s Ye

s (s

uppo

rt to

CS

– p

roje

ctis

ed))

W

B N

o Ye

s Ye

s N

o N

o Ye

s (in

vest

men

t pro

ject

s)

5 Bas

ket f

undi

ng is

fund

ing

to a

sec

tora

l poo

led

fund

out

side

of t

he b

udge

t, e.

g. m

edic

ines

poo

l.

Annex 3D: Additional Donor Information

(217)

Table 3D.3: Official Development Assistance

BILATERALAustralia 12.63 11.64 6.62 6.99 5.77 9.81 9.48 5.80 6.83 4.59 2.02 82.18

Austria 4.78 4.46 3.12 5.56 4.80 14.78 5.09 2.04 21.37 3.35 5.17 74.52Belgium 3.36 1.09 7.37 1.38 0.68 0.96 2.54 9.86 2.76 8.72 10.58 49.30Canada 17.38 5.76 13.39 9.11 12.87 11.66 7.99 13.88 9.02 26.70 27.34 155.10

Denmark 36.35 45.49 46.81 30.07 47.61 51.53 46.85 48.35 52.09 67.26 67.60 540.01Finland 12.55 11.85 10.86 10.06 12.19 21.79 11.60 10.55 11.79 21.99 22.48 157.71France 52.05 60.46 41.76 61.76 53.90 49.00 23.27 26.46 450.73 28.44 24.94 872.77

Germany 101.31 110.90 41.27 40.49 85.16 51.57 47.76 40.70 230.51 38.31 39.10 827.08Ireland 1.15 2.27 2.37 6.48 7.67 9.34 15.39 18.70 29.37 39.90 48.69 181.33

Italy 104.99 191.74 34.81 20.39 110.56 11.56 13.09 13.08 446.46 15.09 26.99 988.76Japan 44.70 41.26 32.17 39.98 41.53 64.27 20.99 34.27 70.03 35.67 19.84 444.71

Netherlands 41.70 54.45 45.66 42.68 48.46 43.90 61.64 86.60 51.97 47.27 54.70 579.03Norway 72.17 52.23 51.79 54.73 49.49 36.67 38.21 32.61 38.68 54.11 61.06 541.75

Portugal 42.51 63.95 53.84 90.71 62.87 128.92 178.07 34.26 23.90 19.11 24.25 722.39Spain 5.78 17.28 19.26 9.44 13.62 10.11 41.24 11.65 33.53 22.60 32.52 217.03

Sweden 73.53 54.15 61.25 52.05 33.91 51.42 46.27 42.62 45.29 56.53 67.92 584.94Switzerland 30.08 27.02 27.09 18.13 21.80 17.62 25.09 23.37 21.64 20.82 27.65 260.31

UK 40.64 37.54 37.34 73.50 59.63 49.43 82.67 185.19 48.39 63.63 65.92 743.88US 73.00 96.00 45.00 71.00 70.45 70.59 115.52 91.84 159.68 135.40 109.96 1,038.44

Others 7.94 5.96 6.36 5.94 6.74 12.78 17.39 26.29 9.92 22.75 39.40 161.47TOTAL 778.60 895.50 588.14 650.45 749.71 717.71 810.15 758.12 1,763.96 732.24 778.13 9,222.71

MULTILATERALSAfDF 33.27 44.16 32.52 56.75 68.80 16.05 14.07 58.64 74.18 33.52 93.28 525.24

EC 101.35 78.96 62.67 71.85 85.59 90.47 81.22 74.52 138.71 91.67 155.02 1,032.03IDA 176.31 160.13 220.90 148.20 131.62 765.05 101.29 57.65 302.83 167.73 205.97 2,437.68

SAF/ESAF/PRGF(IMF) 21.05 18.29 34.18 28.82 59.61 10.69 10.88 11.75 2.40 197.67UNDP 17.68 9.26 9.14 9.98 14.62 8.82 5.54 6.45 4.02 8.91 8.51 102.93

UNHCR 55.16 43.52 0.36 1.01 0.77 0.53 0.82 1.05 1.88 1.54 2.20 108.84UNICEF 19.72 17.95 14.44 9.42 7.00 6.58 7.14 8.42 6.49 7.80 8.51 113.47

WFP 47.70 15.99 3.67 3.15 2.23 3.37 2.34 5.73 8.77 5.21 98.16Others 4.60 9.83 10.20 8.05 11.14 10.57 13.12 14.59 21.58 28.29 29.90 161.87

TOTAL 476.84 379.80 368.52 308.93 356.87 929.12 286.18 234.35 566.30 359.98 511.00 4,777.89

TOTAL BY YEAR 1,255.44 1,275.30 956.66 959.38 1,106.58 1,646.83 1,096.33 992.47 2,330.26 1,092.22 1,289.13

TOTAL BY

DONOR2001 2002 2003 20041994 1995 1996 1997 1998 1999 2000

Source: OECD DAC International Development Statistics (online database) (OECD DAC 2005–2006).


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ANNEX 4: PUBLIC FINANCE MANAGEMENT

Annex 4A: Status and Trends in Public Finance Management

Introduction 1. Budget support is always accompanied by a focus on public finance management (PFM). Donors considering disbursing through government systems have a special interest in the government's fiduciary standards. Moreover, one of the principal claims for budget support is that using government PFM systems can make a special contribution towards strengthening them. Hence a growth in the number of PFM diagnostic reports (Public Expenditure Reviews [PERs], Country Financial Accountability Assessments [CFAAs], Country Procurement Assessment Reports [CPARs], etc.), as well as donor-specific fiduciary analyses. In six of the seven GBS study countries, the donor demand for tracking of HIPC relief funding was pivotal, with Assessment and Action Plans (AAPs) as path-breakers; Vietnam, not in the HIPC group, is an exception. 2. The scope for collaboration and harmonisation in PFM analysis and PFM capacity development has been increasingly recognised. The second volume of DAC guidelines on Harmonising Donor Practices for Effective Aid Delivery (OECD DAC 2005) includes a chapter on capacity development for PFM. A PFM Performance Measurement Framework has been developed under the auspices of the multi-agency PEFA (Public Expenditure and Financial Accountability) programme (PEFA 2005). 3. The Performance Measurement Framework identifies the critical dimensions of performance of an open and orderly PFM system as follows:

1. Credibility of the budget – The budget is realistic and is implemented as intended. 2. Comprehensiveness and transparency – The budget and the fiscal risk oversight are comprehensive, and fiscal and budget information is accessible to the public. 3. Policy-based budgeting – The budget is prepared with due regard to government policy. 4. Predictability and control in budget execution – The budget is implemented in an orderly and predictable manner and there are arrangements for the exercise of control and stewardship in the use of public funds. 5. Accounting, recording and reporting – Adequate records and information are produced, maintained and disseminated for decision-making control, management and reporting purposes. 6. External scrutiny and audit – Arrangements for scrutiny of public finances and follow-up by executive are operating.

4. A set of 28 high-level performance indicators has been developed, as a basis for assessing improvements in PFM performance over time. Three further indicators assess aspects of donor performance. PEFA has developed a detailed scoring methodology (fully described in PEFA 2005), in which the assessment for each high-level indicator is based on a number of specified components. 5. There is an ongoing PEFA analysis being undertaken in Mozambique (2005) by the Overseas Development Institute (ODI); however at the time that this study was completed the PEFA analysis was not available for public reference. It is beyond the scope of this study to undertake a full PEFA analysis (and in any case the PEFA scoring system was not finalised until


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2005). However, in the interests of standardisation and comparability, the PFM analysis of the GBS study has been oriented towards the PEFA indicator framework as far as possible. We have used a standard matrix to consider PFM issues against the principal dimensions defined by PEFA, drawing on the secondary sources available (these are listed at the end of this annex). This matrix also shows the HIPC AAP indicators and diagnostic results. Our main assessment is of the current state of PFM, although we also examine developments during the evaluation period and offer a judgement as to whether systems are improving. We do not attempt the detailed scoring prescribed by PEFA, but express our judgement as good, moderate or weak. Where insufficient information was available, no such judgement is offered. In the future, rigorous assessment and reporting according to the PEFA guidelines should provide a much more robust and transparent basis for assessing the quality of PFM systems than was available during the evaluation period. It will also allow progress in capacity development to be more systematically monitored.

Overview of PFM in Mozambique Current status 6. Numerous PFM diagnostic studies have been performed during the period 2000–05 in Mozambique:6 two PERs; CFAA; CPAR; Report on Observance of Standards and Codes (ROSC) in two modules; four Joint Donor Review studies; two Fiduciary Risk reports; SISTAFE Quality Assurance Group monitoring report; reports on budget execution (Andersson 2003a-c) and the annual report on the state accounts by the Administrative Court (Tribunal Administrativo) to the Assembly of the Republic. Most recently a full PEFA analysis has been undertaken by ODI and sponsored by the PGBS donor group. 7. We draw heavily on the recent Scanteam Public Financial Management Assessment (2004), which concludes:

Overall PFM risk in Mozambique remains high although the situation is improving. Over the period that PGBS has been provided management of the economy has been quite satisfactory, but comprehensiveness and transparency of the budget remains poor, the medium-term planning and budgeting is weak, while budget execution and accounting and reporting present quite serious weaknesses. The area of greatest concern, however, remains external audit and accountability.

While this report was not acknowledged by the GOM, it was the most substantial analysis available to us. A full PEFA evaluation was made publicly available only in February 2006.

Trends 8. PFM reforms are moving ahead in a very structured and comprehensive manner. The trend in PFM is therefore seen as quite positive, where successful implementation of the SISTAFE is intended to address many of the current weaknesses. There are further improvements in the fields of medium-term planning and budgeting, more comprehensive and accessible reporting, and continued strengthening of the MPF's internal inspectorate, IGF.

9. A number of areas remain weak, particularly those related to addressing larger institutional reforms. Public sector reform (PSR) is complicated and challenging; however, it is the linchpin for the success of many other reforms and therefore needs continued support from donors and stronger commitment from the GOM. "Improvements in the judicial and legal sectors, the supreme audit institutions, and a real capacity to reduce and combat funds misdirection and corruption are required in order for ‘horizontal accountability’ within the State to be strengthened. Accountability of the State to CS also remains weak" (Scanteam 2004).

6 See the selected references at the end of this annex.

Annex 4A: Status and Trends in PFM

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Overview of high-level PFM outcomes and concerns Fiscal discipline 10. In the years 2000–01, the fiscal deficit widened and exceeded the approved budget deficit, due to the impact of bank restructuring operations and the cost of reconstruction after the floods. In the following years, fiscal discipline strengthened again and the actual fiscal deficit was reduced, and kept in line with the approved budget deficit. In 2004, an election year, no clear sign could be observed in that the GOM had loosened its fiscal discipline.

Composition of expenditure 11. It is very difficult to make a reliable comparison between the out-turns and the approved budget because of the absence of detailed classifications. For almost one-third of the budget expenditures, it is difficult to attribute them to specific budget lines. The improvements in the classifications in 2001, and also the preparation of Quarterly Budget Execution Reports (QBERs) by the MPF since 2000 have improved this situation, but it is still hard to make a reliable assessment.

Revenue performance 12. The broadening of the tax base, the introduction of new taxes and increased efficiency in tax administration improved the predictability and stability of the revenue out-turns. Revenue forecasts are currently quite reliable. Revenue collection was below target for 2004. 13. Over the last decade, the GOM has carried out significant tax administration reforms aimed at increasing domestic revenue and therefore reducing the medium-term dependence on foreign aid. A streamlining operation of the tax system started in 1993. The outsourcing of customs management to a private firm in 1997 and the introduction of value-added-tax (VAT) in 1999 were part of these tax reforms. In 2002, the GOM further simplified its tax system and its administration by reducing the marginal rates and by introducing a new tax law and a new fiscal incentive code. In 2003, it introduced new income taxes (individual and corporate income) and a motor vehicle tax, and increased the fuel tax. As a result of these reforms, government revenue as a share of GDP increased steadily from 12% in 1999 to 12.8% in 2003 and fell to 12.3% in 2004. Currently the GOM is preparing the legislative and institutional framework for the creation of a Central Revenue Authority (CRA).

Public expenditure 14. All donor funding for the public sector, whether fully on-budget or not, should in principle be reported and processed in QBERs. The GOM has stated its commitment to eliminate off-budget funding in the PAF for 2004 and 2005. 15. In the last few years, more off-budget funds (donor funds and own revenues) have been captured in the QBERs than in the previous years. The MPF estimated its capture of donor funding in the QBERs for 2003 at 38% (this was 0% in 2001), while it had information on a considerably larger amount. It is intended that SISTAFE will contribute to a further capturing of donor flows.

Budgetary classification 16. Government expenditures are presented on an organisational and economic basis. Furthermore, there exists a broad functional classification. In 2001, the GOM agreed on a plan of action to implement the UN-supported Classifications of Functions of Government (COFOG) and increased the numbers of key functional classifiers from 14 in 2001 to 25 in 2003. Linked to the discussions on the implementation of the PARPA, these functional classifiers enabled the GOM to track the poverty-related expenditures.


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17. So far, the COFOG has been implemented only partially. In the period 2004–06, the GOM will further revise the functional and organic classifiers to improve consistency between the budgets on the one hand and budget execution reports on the other. In early 2004, the GOM intended to introduce programme-based budgeting by 2006, but this has now been postponed for an indefinite period (see also point 11).

Publication and public accessibility of key fiscal information, procurement information and audit reports 18. The GOM has taken a number of steps to increase the transparency of budgetary operations. In 2000, it started publication of QBERs that included detailed information on revenue, expenditure and financing. However, the public accessibility of these reports is still very limited. Furthermore, in November 2004, the GOM started the introduction of SISTAFE (see point 19). It was anticipated that this system will be rolled out to five line ministries and cover 60% of public expenditures by 2005, but this is now the likely target for 2006. The audits of the state accounts by the Administrative Tribunal are not accessible to the Mozambican public but made available only to the government, the National Assembly and the donors. 19. Up to now, the key fiscal information is also extremely difficult to access and understand and it is not electronically available. In 2005, however, the MPF intends to publish the QBERs on the internet in a more comprehensible format. Also the MediumTerm Fiscal Framework (MTFF) should become a public document.

Fiscal planning, expenditure policy-making and budgeting 20. The budget formulation lacks a clear policy basis. An effective link between budgeting and strategic planning, as reflected in the PARPA and the PES, is missing. Budget formulation is mainly incremental with limited attention to allocative efficiency and policy priorities. The MTFF, (locally called CFMP) does not reach the political level. The MTFF is only used as a tool for fiscal discipline by fixing the ceilings for spending units in the early phases of the budget cycle. In practice it has no real meaning and application. 21. In the near future, the GOM intends to increase the role of the MTFF by formalising it at the strategic and policy level, and subsequently make it part of the budgeting framework, and publicly available. Owing to the lack of capacity in budgeting process, the upgrading of the MTFF into an allocative tool (such as MTEF) has in recent years received less attention than in the late 1990s. The limited budget comprehensiveness has discouraged this process. Consequently, large amounts of donor funds go straight to the line ministries or even to projects. If the GOM were able to strengthen its budgeting capacity in the coming years, the introduction of MTEF, together with some programme-based budgeting at a later stage, would be crucial steps towards improving the link between strategy, budget, outputs and impacts. 22. Furthermore, the different strategy and review documents of the GOM are intended to become more streamlined and consistent. First, the government plans that the PES will become more integrated and the link between the PES and the PAF matrix will be strengthened. Second, it is the intention to make the review documents (Balanço do PES – BdPES, budget execution reports, and various monitoring reports) more consistent. Such adjustments might contribute to improved coherence and ownership for these instruments, and might strengthen the link between planning, budgeting and monitoring.

Orderliness and participation in the annual budget process 23. The engagement of most line ministries in the budget process is very limited and their capacity for planning and budgeting remains weak. Dialogue between the MPF and the line


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ministries seldom takes place. Line ministries have limited incentives to argue with MPF for their share in the available resource envelope, as it is still much easier to gather donor resources outside the framework (off-budget funds). Moreover, the limited sectoral expertise in MPF makes a fruitful dialogue even more unlikely. Nevertheless, in the context of PARPA, a slight shift in the direction of more integrated planning can be observed.

Coordination of the budgeting of recurrent and investment expenditures 24. The preparation of budgets for recurrent and capital expenditure is largely separated, although both are part of one integrated budget process. In line ministries, the finance directorate is responsible for recurrent expenditure while the planning directorate deals with investment expenditure. One result, with donor-financed projects, is that when donor funding runs out the project will close down or the MPF has to find recurrent expenditure for which it had no prior warning. Some linkages between these two processes are made at key points in the budget formulation process, especially towards the end of the budget preparation process, where both budgets are merged in one document. The introduction of an MTEF could solve these weaknesses, but the capacity is too limited to allow this to happen soon.

Planning and budgeting 25. Because of a seasonal pattern in the government’s own income as well as delays and low predictability of donor disbursements, the GOM often faces cash-flow constraints, especially in the first six months of the year. As a consequence, the Treasury has to cut or postpone transfers to the spending units. This is why, especially in the first few months of the fiscal year, spending units have limited access to resources. 26. At the beginning of the fiscal year, the Treasury provides an advance to the spending units of 2/12 of the planned annual expenditure. Spending units have to report on their expenditures before they receive further disbursements. The Treasury affirms that the transfer of additional funding has often been delayed by irregularities and poor-quality reporting (in respect of the reporting requirements) and by slow delivery of the required justification. Spending units state that Treasury is slow in giving feedback on their reports. 27. Overall budget execution improved in 2004. Nevertheless, budget execution rates are still very low in some priority sectors, such as health and water, leading to inadequate outputs, while other sectors were over-spent.

Internal controls and audits 28. The quality of internal control and audits in the public sector is still underdeveloped, but the Internal Inspectorate (IGF) of MPF has been subject to significant reforms. This reform process started in 1996 with continuous technical and financial support, mainly from Sweden. Step-by-step IGF is implementing its own strategic plan and is building a control and audit culture within the public sector. In recent years, it has recruited larger numbers and better-skilled staff (current professional staff number 126) and has been training its existing staff. IGF also supervises and provides training and advice to the inspectorates of other ministries. It has recently prepared a strategic (5-year) and action plan for the strengthening of internal audit functions. This plan needs to be agreed in the new coordination council for control and audit.7 In the Joint Review 2004 it was agreed that the 2005 PES and PAF would contain measurable targets for progress with the implementation of this action plan.

7 This council was established under the SISTAFE decree of June 2004. It includes representatives of the inspectorates of the different ministries and the Supreme Audit Institution, the Administrative Tribunal (TA). It meets three times a year.


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29. In the coming years, the further introduction of SISTAFE might lead to further and more efficient internal control and audits. A key concern with regard to SISTAFE, however, is the continuous revision of implementation deadlines.

Procurement systems and regulatory framework 30. The current procurement rules and regulations are weak and often not followed. Awareness within the civil service of these rules is also limited. The system is also vulnerable to corruption owing to lack of transparency. 31. A coherent and comprehensive reform of the central procurement system is required. In some line ministries, donors are providing support to introduce better procurement practices. Some training has been provided, but this has not resulted in a fundamental change in procurement practices. Recently, the GOM has started the drafting of a new procurement code, but overall progress in procurement reform has been slow.8

Financial audit 32. The supreme audit institution of Mozambique, the Administrative Tribunal, is a young (established in 1997) organisation that prepared its first audit of the state accounts in 2000. It is still a rather weak and understaffed organisation with insufficient resources to carry out the required tasks, although the quality of its auditing work has increased significantly in recent years, in terms of the time needed to perform the yearly audit of state Accounts as well as in the quality of audits. 33. The Administrative Tribunal presented its audit of the General State Accounts for 2003 to parliament in October 2004, much faster than in previous years. According to the new financial law, the MPF has to issue General State Accounts by May, five months after the close of the fiscal year, and the Administrative Tribunal has to deliver its audit report on these accounts to parliament by October the same year. This rescheduling (from 20 months in the previous law) was discussed during the Joint Review in 2004. The audit of the state accounts is extremely important for the GBS donors, because the flow of GBS funds is transferred into the principal state budget account to be audited annually by the Administrative Tribunal. 34. Mozambique is subject to Napoleonic law, meaning that the external auditing of the General State Accounts is the function of a court of law, not an auditor trained in accounting.9 Auditing (pre- and post-audit) is only one of the three specific responsibilities given to the Administrative Tribunal by the Constitution.10 The department within the Administrative Tribunal dealing with audits is responsible for the auditing of all 800 public accounting institutions but has fewer than 20 staff members. In 2004 (for 2003), the Administrative Tribunal gave “no objection certificates” on 437 bodies and undertook supplementary audits on just 8 of these (i.e. an extremely low ratio of only 1%). In all eight cases, problems were identified, but none of the processes has been finalised by the Administrative Tribunal’s presiding judges. In 2005, 39 supplementary audits were to be undertaken. 35. The Assembly of the Republic debates the reports on the state accounts and provides comments, but has poor technical skills to carry out this task. The Planning and Budget Committee of the Assembly of the Republic does not have a professional secretariat to support

8 In 2002, the Country Procurement Assessment Report (CPAR) of the World Bank made a series of proposals on how to address the current weaknesses in the procurement system. 9 This is the same in other countries following Napoleonic law, such as Portugal, France and Spain. In countries with an Anglo-Saxon tradition, external auditing is a function of an auditor trained in accounting. 10 The other two are adjudication of legal controversies arising from administrative acts and procedures and adjudication of appeals against decisions of the State and its organs.


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its supervising role. As a consequence, its review role is hampered and no further investigation can be done. In recent years, the MPF has become more responsive to both the Administrative Tribunal reports and comments from the Assembly of the Republic. During the donor–government Joint Reviews, the Administrative Tribunal has received significant attention. For instance, the 2004 Review discussed the resources allocated to the Tribunal, the follow-up of Tribunal recommendations and the reduction of the time lag in the preparation of the audits of the General State Accounts.

Aid and PFM 36. The donors continue to be constructive partners in working with the GOM to address PFM issues, and the particular focus of PGBS on improving this area has realised tangible results in the improvements of systems on the ground. On the other hand, TA and capacity building designed to affect this area have probably been the weakest element of the PGBS programme and PGBS donors and GOM are working to better address this issue. Donors have also worked towards harmonising disbursements in line with government budget. Predictability of donor disbursements has improved since 2000. The volume of off-budget funding remains an area of significant concern and requires further attention to reduce the negative impact of these funds for the development of a comprehensive budget process although, given the ongoing changes in the system, e.g. the coming on-line of SISTAFE, it is important that this shift takes places relatively gradually so as not to overwhelm the new system.

37. The GOM, in line with donor partnership, is focusing on a limited number of instrumental reforms, notably PSR, Revenue reform, SISTAFE, procurement, and the Internal Inspectorate (IGF). This has rationalised a very extensive reform agenda.

38. Our perception is that there are justified concerns over the effectiveness of unearmarked aid flows entering a budget which is incremental in nature, de-linked from costed outcomes, exhibits little improving operational efficiency over time, depends on vulnerable and non-transparent procurement practices, and remains a fluctuating indicator of how money is spent and allocated in Mozambique. PFM reforms have focused first on accounting and reporting mechanisms rather than on the link between planning and results-based budgeting. Nevertheless, PGBS has been influential, not only through its relatively modest funding but also through the impetus it has created to focus dialogue on the national budget and shared policy objectives across sectors. PGBS’s most important effect is that it is beginning to change the relationship and reporting lines between core government and line ministries, and between line ministries and donors. These changes also create conditions for greater accountability.


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39. Our perception is that the movement towards PGBS reflects changing donor attitudes towards Mozambique’s PFM systems, and towards the use of government systems in the delivery of aid, reflecting a combination of trends:

• Improvements in the quality of PFM.

• A better appreciation by donors of the weaknesses of Mozambique’s PFM systems, leading to a stronger focus on strengthening those systems. Indeed the use by PGBS donors of government’s own financial management system has improved the accountability of those systems to both parliament and to CS but ensuring a more open and transparent budget process.

• Critically, in spite of the weaknesses of the systems themselves, PGBS has brought to the forefront the costs imposed by donors of operating outside of the system. This has made many more donors willing to consider channeling aid directly through the budget, since this: (i) provides impetus to identify weaknesses in the system; (ii) leads to identification of measures to strengthen the systems; and (iii) provides incentives for the GOM to implement these reform measures in a comprehensive manner.

Sources Andersson, P.-Å. (2003a). An Analysis of Budget Execution in Mozambique. January–September 2003.

Report 1, Technical Support to Joint Review of Budget Performance. (December 2003) Maputo. Andersson, P.-Å. (2003b). An Analysis of Budget Execution in Mozambique, 2001. Report 2, Technical

Support to Joint Review of Budget Performance. (December 2003) Maputo. Andersson, P.-Å. (2003c). Recommendations on the budget execution reports in Mozambique. Report 3,

Technical Support to Joint Review of Budget Performance. (December 2003) Maputo. Crown Agents (2001). Programme Aid Verification, 2000 to 2003. Final Report to Department for

International Development in Southern Africa. Harare. (April 2001). Danish Ministry of Foreign Affairs/Danida (2003). Budget Support from Denmark to Mozambique 2004 –

06 for the Implementation of the Poverty Reduction Strategy (PARPA). Draft Project Document. (November 2003) Maputo.

DFID (2002a). Managing Fiduciary Risk when Providing Direct Budget Support. London: DFID.

Foster, M. (2002). Direct Budget Support to Mozambique. Report to the Department for International Development. (10 November 2002).

Government of Mozambique (2003): "Matrices for Performance Assessment Framework (PAF), Poverty Reduction Strategy Credit (PRSC)". (August 2003) Maputo.

Gustafsson, A. and Disch, A. (2001). Joint Macro-financial Aid Programme to Mozambique: Background Study for Joint Programme Review. Scanteam.

IDA and IMF (2005) Update on the Assessments and Implementation of Action Plans to strengthen Capacity of HIPCs to track Poverty-Reducing Public Spending. Prepared by IMF Fiscal Affairs Department and the World Bank Poverty-Reduction and Economic Management Network.

IMF (2001). Report on the Observance of Standards and Codes (ROSC). Fiscal Transparency Component. Washington D.C.

IMF (2003). Report on the Observance of Standards and Codes (ROSC). Data Module. Washington D.C.: IMF.

Lønstrup, E. (2002). Status of Public Financial Management in Mozambique: Fiduciary Risk Assessment. London: DFID.

PEFA (2003a). PFM Performance Measurement Framework. Discussion Draft. (16 October 2003) Washington D.C.

PEFA (2003b). The Standarized Assessment – Issues for Consideration. (16 October 2003) Washington D.C.


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PEFA Secretariat (2005). Public Financial Management: Performance Measurement Framework. (June) Washington, DC: PEFA Secretariat, World Bank.

Scanteam (2004). Public Finance Management Assessment, Mozambique 2004. (September 2004) Oslo: Scanteam.

Torp, J.E and Disch, A. (2002) Assessment of the Functioning and Achievements of Objectives of the Joint Donor Programme for Macro Financial (Budget) Support to Mozambique. Scanteam, Oslo.

World Bank (2001a). Mozambique: Public Expenditure Management Review. December. Africa Region. Macroeconomics 1. Report no. 22985-Moz. Washington D.C.: World Bank.

World Bank (2001b). Mozambique, Country Financial Accountability Assessment. (August 2001) Washington D.C.: World Bank.

World Bank (2002). Country Procurement Assessment Report. Volume I: Summary of Findings and Recommendations. Washington D.C.: World Bank.

Joint Review Aide Memoire (2003). Joint Donor Review 2003.

Aide Memoire (2004). Joint Review 2004.

Aide Memoire (2005). Revisão Conjunta – 2005. (12 May 2005).

Joint Donor Review (1999). Joint Donor Review of Programme Assistance. Maputo.

Joint Donor Review (2002): Budget Support to Mozambique – Minutes. (May 2002) Maputo.

Joint Donor Review (2004). Joint Donor Mid-Year Review of Programme Assistance. Maputo.

Gen

eral

Bud

get S

uppo

rt in

Moz

ambi

que

(232

)

Tabl

e 4A

.1: P

EFA

PFM

Per

form

ance

Mea

sure

men

t Ind

icat

ors11

for M

ozam

biqu

e N

o.

Subj

ect

Scor

e20

01

Scor

e 20

04

Tre

nd

Com

men

ts a

nd A

naly

sis

A

. PFM

OU

T-T

UR

NS:

C

redi

bilit

y of

the

Bud

get

PI–1

Agg

rega

te e

xpen

ditu

re o

ut-tu

rn

com

pare

d w

ith o

rigin

al a

ppro

ved

budg

et

Mod

erat

e

Stab

le

PI–2

Com

posi

tion

of e

xpen

ditu

re o

ut-

turn

com

pare

d to

orig

inal

app

rove

d bu

dget

W

eak

Im

prov

ing

3 Re

liabi

lity

of b

udge

t as g

uide

to

out-t

urn

(Lev

el a

nd c

ompo

sitio

n of

ou

t-tur

n is

"qui

te c

lose

" to

bud

get)

B B

Impr

ovin

g

Situ

atio

n w

as se

en a

s im

prov

ing

in th

e 19

90s a

s par

t of G

OM

’s re

form

pac

kage

–ke

y ar

gum

ent

for

Moz

ambi

que

as a

“su

cces

s st

ory”

. In

the

yea

rs 2

000–

0 th

e fis

cal

defic

it w

iden

ed a

nd

exce

eded

the

appr

oved

bud

get d

efic

it, o

win

g to

the

impa

ct o

f ban

k re

stru

ctur

ing

oper

atio

ns a

nd

the

cost

of r

econ

stru

ctio

n af

ter t

he fl

oods

. In

the

follo

win

g ye

ars,

fisca

l dis

cipl

ine

stre

ngth

ened

ag

ain

and

the a

ctua

l fis

cal d

efic

it w

as re

duce

d, an

d ke

pt in

line

with

the a

ppro

ved

budg

et d

efic

it.

In 2

004,

an

elec

tion

year

, no

clea

r si

gn c

ould

be

obse

rved

the

first

hal

f ye

ar th

at G

OM

had

lo

osen

ed it

s fis

cal d

isci

plin

e.

In 2

000

the

situ

atio

n w

as v

ery

diff

icul

t to

asse

ss –

larg

e sh

ares

of e

xpen

ditu

res

coul

d no

t be

attri

bute

d to

spe

cific

bud

get

lines

, an

d cl

assi

ficat

ion

so c

oars

e as

to

be m

eani

ngle

ss w

hen

com

parin

g w

ith st

ated

pol

itica

l int

ents

/prio

ritie

s. Si

nce 2

003

ther

e is a

new

clas

sific

atio

n sc

hem

e an

d im

prov

ed ex

pend

iture

repo

rting

mak

ing

situ

atio

n m

uch

clea

rer,

mor

e tra

nspa

rent

, tho

ugh

still

a co

nsid

erab

le w

ay to

go

to.

How

ever

, pau

city

of d

ata

still

mak

es it

diff

icul

t to

prov

ide

clea

r ass

essm

ent o

f the

relia

bilit

y of

th

e bu

dget

. A n

ew so

urce

of f

unds

cla

ssifi

er h

as b

een

intro

duce

d in

200

5.

The f

orm

al p

roce

ss u

nder

take

n by

GO

M fo

r bud

get e

labo

ratio

n is

quite

com

preh

ensiv

e. T

he “t

op-

dow

n” sp

endi

ng c

ap im

pose

d by

the

MPF

is c

ombi

ned

with

the

“bot

tom

-up”

exp

endi

ture

det

ail

give

n by

line

min

istri

es. L

ike

man

y ot

her c

ount

ries

Moz

ambi

que

pres

ents

a fo

rmal

sep

arat

ion

betw

een

the

curr

ent a

nd in

vest

men

t spe

ndin

g. A

ctua

l exp

endi

ture

for r

ecur

rent

inve

stm

ent i

s la

rgel

y fo

r per

sonn

el e

xpen

ditu

res a

nd is

ther

efor

e ge

nera

lly e

xecu

ted

at q

uite

hig

h le

vels

. The

in

vest

men

t exp

endi

ture

exec

utio

n on

the o

ther

han

d va

ries h

ighl

y be

twee

n se

ctor

s and

regi

ons o

f th

e co

untry

. Th

e bu

dget

out

-turn

pre

sent

ed b

y th

e St

ate

Gen

eral

Rep

ort v

arie

s m

ore

than

5%

, but

less

than

20

% fo

r 200

3 an

d 20

04.

11 T

he P

EFA

indi

cato

rs (P

I-1 to

PI–

28 a

nd D

–1 to

D–3

) are

take

n fro

m th

e Ju

ne 2

005

vers

ion

of th

e P

EFA

PFM

Fin

anci

al M

anag

emen

t Fra

mew

ork.

The

16

HIP

C A

AP

In

dica

tors

(200

4 ve

rsio

n) a

re in

clud

ed in

ital

ics.

Ann

ex 4

A: S

tatu

s an

d Tr

ends

in P

FM

(233

)

No.

Su

bjec

t Sc

ore

2001

Sc

ore

2004

T

rend

C

omm

ents

and

Ana

lysis

PI–3

Agg

rega

te re

venu

e ou

t-tur

n co

mpa

red

with

orig

inal

app

rove

d bu

dget

M

oder

ate

Impr

ovin

g C

usto

ms,

VA

T su

cces

sful

ly i

ntro

duce

d, n

ew t

ax c

odes

int

rodu

ced,

rev

enue

aut

horit

y be

ing

prep

ared

, rev

enue

as p

erce

ntag

e of

GD

P on

trac

k, c

olle

ctio

ns c

lose

to ta

rget

s alth

ough

targ

et o

f 15

% fo

r 200

5 m

ay n

ot b

e re

ache

d.

PI–4

Sto

ck a

nd m

onito

ring

of

expe

nditu

re p

aym

ent a

rrea

rs

M

oder

ate

/ St

rong

Stab

le

8 Le

vel o

f pay

men

t arr

ears

(V

ery

few

or n

o ar

rear

s ac

cum

ulat

ed)

A A

Impr

ovin

g

In M

ozam

biqu

e’s

publ

ic e

xpen

ditu

re s

yste

m, p

aym

ent a

rrea

rs a

re n

eglig

ibly

low

. The

sys

tem

pr

ovid

es fo

r rep

leni

shm

ent o

f fun

ds a

gain

st d

ocum

enta

tion

of th

e us

e of

fund

s in

the

prev

ious

m

onth

– th

at is

, mon

ies

are

prov

ided

to s

pend

ing

units

onl

y up

on p

rodu

ctio

n of

the

prev

ious

m

onth

’s j

ustif

ied

acco

unts

. Si

nce

docu

men

tatio

n of

the

pas

t m

onth

’s e

xpen

ditu

res

is o

ften

dela

yed

or in

com

plet

e, al

loca

tions

to m

inis

tries

tend

to la

g, so

met

imes

bad

ly, l

eadi

ng to

chro

nic

unde

r-sp

endi

ng. M

ozam

biqu

e has

also

not

suffe

red

from

chro

nic l

iqui

dity

shor

tage

s. Th

is str

ong

repl

enis

hmen

t sys

tem

, alo

ng w

ith s

uffic

ient

cur

renc

y liq

uidi

ty, g

ener

ates

ver

y lit

tle s

tock

of

arre

ars.

Moz

ambi

que

is in

trodu

cing

a n

ew p

aym

ent a

utho

risat

ion

proc

ess i

n w

hich

pay

men

ts a

re b

eing

pr

oces

sed

in t

he e

-SIS

TAFE

, ov

erco

min

g th

e ex

cess

ive

adm

inis

trativ

e bu

rden

of

the

repl

enis

hmen

t sys

tem

, and

und

erpa

ymen

t phe

nom

ena.

Und

er e-

SIST

AFE

, spe

ndin

g ag

enci

es ar

e gi

ven

spen

ding

lim

its a

nd th

is li

mit

will

be

pre-

regi

ster

ed in

the

e-SI

STA

FE.

B

. KE

Y C

RO

SS-C

UT

TIN

G

ISSU

ES: C

ompr

ehen

siven

ess

and

Tran

spar

ency

PI–5

Cla

ssifi

catio

n of

the

budg

et

M

oder

ate

Impr

ovin

g 5

Clas

sific

atio

n of

bud

get

trans

actio

ns

(Fun

ctio

nal a

nd/o

r pro

gram

me

info

rmat

ion

prov

ided

)

C B

Impr

ovin

g G

over

nmen

t exp

endi

ture

s are

pre

sent

ed o

n an

org

anic

and

eco

nom

ic b

asis

. Fur

ther

mor

e, th

ere

exis

ts a

bro

ad f

unct

iona

l cl

assi

ficat

ion.

In

2001

, th

e G

OM

agr

eed

on a

pla

n of

act

ion

to

impl

emen

t the

CO

FOG

and

incr

ease

d th

e nu

mbe

rs o

f key

func

tiona

l cla

ssifi

ers f

rom

14

in 2

001

to 2

5 in

200

3. L

inke

d to

the

disc

ussi

ons o

n th

e im

plem

enta

tion

of th

e PA

RPA

, the

se fu

nctio

nal

clas

sifie

rs e

nabl

ed th

e G

OM

to tr

ack

the

pove

rty-r

elat

ed e

xpen

ditu

res.

So fa

r, th

e C

OFO

G h

as o

nly

been

par

tially

impl

emen

ted.

In th

e pe

riod

2004

–06,

the

GO

M w

ill

furth

er re

vise

the

func

tiona

l and

org

anic

clas

sifie

rs to

impr

ove c

onsi

sten

cy b

etw

een

the b

udge

ts

on th

e on

e ha

nd a

nd b

udge

t exe

cutio

n re

ports

on

the

othe

r. In

ear

ly 2

004,

the

GO

M in

tend

ed to

in

trodu

ce p

rogr

amm

e-ba

sed

budg

etin

g by

200

6, b

ut th

is ha

s now

bee

n po

stpon

ed fo

r an

inde

finite

pe

riod.

Gen

eral

Bud

get S

uppo

rt in

Moz

ambi

que

(234

)

No.

Su

bjec

t Sc

ore

2001

Sc

ore

2004

T

rend

C

omm

ents

and

Ana

lysis

PI–6

Com

preh

ensi

vene

ss o

f inf

orm

atio

n in

clud

ed in

bud

get d

ocum

enta

tion

Wea

k Im

prov

ing

1 C

ompo

sitio

n of

the

budg

et e

ntity

(V

ery

clos

e fit

to G

over

nmen

t Fi

nanc

e St

atist

ics [

GFS

] de

finiti

on o

f gen

eral

go

vern

men

t)

A B

Proc

ess u

nder

way

to in

crea

se d

onor

fund

cov

erag

e, n

ow e

stim

ated

at 3

8%. C

over

age

of "

own

rece

ipts

" als

o im

prov

ing

thro

ugh

stru

ctur

ed p

rogr

amm

e. M

ajor

hol

es re

mai

n. C

ross

refe

renc

e to

off-

budg

ets a

nnex

and

indi

cato

r PI-

7 an

d 2.

C

urre

nt f

isca

l rep

ortin

g co

vera

ge in

the

GO

M is

wel

l mat

ched

with

the

IMF’

s G

over

nmen

t Fi

nanc

e St

atis

tics,

incl

udin

g th

e ge

nera

l go

vern

men

t ac

tiviti

es o

f st

ate,

reg

iona

l an

d lo

cal

gove

rnm

ents

in p

ropo

sed

budg

ets a

nd it

s out

-turn

. Th

e G

OM

has

impr

oved

its f

isca

l rep

ortin

g sy

stem

in tw

o ph

ases

. In

2001

, rep

ortin

g co

vera

ge

and

budg

et c

lass

ifica

tion

was

impr

oved

. In

June

200

4, a

s a

resu

lt of

SIS

TAFE

, a n

ew b

udge

t co

vera

ge a

nd c

lass

ifica

tion

syst

em w

as i

ntro

duce

d. T

he m

ost i

mpo

rtant

one

s ar

e: (

i) a

new

fu

nctio

nal

clas

sific

atio

n, a

dopt

ing

the

2001

GFS

M s

truct

ure;

(ii)

sou

rce

of r

esou

rces

cl

assi

ficat

ion;

(iii)

mor

e det

aile

d or

gani

c cla

ssifi

catio

n, in

clud

ing

Dis

trict

Gov

ernm

ent l

evel

, and

(iv

) a

new

Cha

rt of

Acc

ount

s. Th

e 20

05 b

udge

t pro

posa

l was

rel

ease

d co

nsis

tent

with

thes

e cl

assi

ficat

ions

. M

ozam

biqu

e ha

stw

o m

ain

fisca

l re

ports

: th

e B

udge

t Ex

pend

iture

Rep

ort

and

the

Gen

eral

A

ccou

nts

of th

e St

ate.

The

form

er is

focu

sed

on th

e bu

dget

exe

cutio

n. T

he tr

ansa

ctio

ns m

ade

with

out b

udge

t sup

port

are

supp

osed

to b

e in

clud

ed in

the

seco

nd.

Non

ethe

less

, th

e G

ener

al A

ccou

nts

of t

he S

tate

sho

w a

ver

y lim

ited

view

of

off-b

udge

t ex

pend

iture

s. A

vas

t qu

antit

y of

fun

ds i

s re

porte

d in

an

anne

x pr

esen

ting

cons

olid

ated

in

form

atio

n in

stea

d of

det

aile

d in

form

atio

n.

Ann

ex 4

A: S

tatu

s an

d Tr

ends

in P

FM

(235

)

No.

Su

bjec

t Sc

ore

2001

Sc

ore

2004

T

rend

C

omm

ents

and

Ana

lysis

PI–7

Ext

ent o

f unr

epor

ted

gove

rnm

ent

oper

atio

ns

2 Li

mita

tions

to u

se o

f off-

budg

et

trans

actio

ns

(Ext

ra [o

r off-

] bu

dget

ex

pend

iture

is n

ot si

gnifi

cant

)

C C

Impr

ovin

g

See

Ann

ex 4

B fo

r a

disc

ussi

on o

f the

off-

budg

et is

sue.

In

form

atio

n on

this

indi

cato

r is l

imite

d bu

t it i

s bel

ieve

d th

at o

ff-bu

dget

flow

sare

subs

tant

ial.

The

only

tan

gibl

e in

form

atio

n de

rived

in

this

are

a ha

s be

en f

rom

the

hea

lth s

ecto

r w

here

it

is

estim

ated

that

roug

hly

30–4

0% o

f gen

eral

bud

get a

ctiv

ities

are f

unde

d by

extra

-bud

geta

ry fu

nds.

The G

OM

is m

akin

g si

gnifi

cant

pro

gres

s in

brin

ging

the o

ff-b

udge

t exp

endi

ture

s int

o th

e bud

get.

For 2

005

an im

porta

nt s

tep

was

mad

e: p

rovi

nces

and

loca

l gov

ernm

ent (

Dis

trict

s) w

ere

fully

de

taile

d an

d in

clud

ed in

the

budg

et p

ropo

sal;

reve

nues

col

lect

ed b

y pu

blic

hos

pita

ls a

s w

ell a

s ta

xes

rela

ted

to th

e is

sue

of p

assp

orts

wer

e bo

th id

entif

ied

and

as w

ell i

nclu

ded

in th

e 20

05

budg

et p

ropo

sal.

In s

pite

of t

hese

eff

orts

, sev

eral

min

istri

es h

ave

off-

budg

et r

even

ues

and

expe

nditu

res.

Ow

n-re

venu

es o

f em

bass

ies,

som

e don

or-f

unde

d in

vest

men

ts pr

ojec

ts an

d th

e who

le ex

pend

iture

of t

he

cent

ral b

ank

are

not y

et c

aptu

red

in th

e bu

dget

. In

the

sam

e w

ay, t

he S

ocia

l Sec

urity

Inst

itute

, w

hose

expe

nditu

re is

clos

ely

rela

ted

to p

over

ty re

duci

ng, a

s wel

l as p

art o

f the

pay

roll

of u

nits

of

the

MPF

are

not

incl

uded

in th

e bu

dget

. PI

–8 T

rans

pare

ncy

of in

terg

over

nmen

tal

fisca

l rel

atio

ns

La

ck o

f inf

orm

atio

n to

mak

e as

sess

men

t

PI–9

Ove

rsig

ht o

f agg

rega

te fi

scal

risk

fr

om o

ther

pub

lic se

ctor

ent

ities

Wea

k Im

prov

ing

The b

ank

cris

es sh

owed

the s

erio

usne

ss o

f add

ress

ing

cont

inge

nt li

abili

ties;

lack

of m

ediu

m- t

erm

de

bt st

rate

gy ra

ises

con

cern

. PI

–10

Publ

ic a

cces

s to

key

fisca

l in

form

atio

n

Wea

k Im

prov

ing

The

GO

M h

as ta

ken

a nu

mbe

r of s

teps

to in

crea

se th

e tra

nspa

renc

y of

bud

geta

ry o

pera

tions

. In

2000

, it s

tarte

d pu

blic

atio

n of

QB

ERs t

hat i

nclu

ded

deta

iled

info

rmat

ion

on re

venu

e, ex

pend

iture

an

d fin

anci

ng.

How

ever

, th

e pu

blic

acc

essi

bilit

y of

the

se r

epor

ts i

s st

ill v

ery

limite

d.

Furth

erm

ore,

in N

ovem

ber 2

004,

the

GO

M st

arte

d th

e in

trodu

ctio

n of

SIS

TAFE

, an

inte

grat

ed

finan

cial

man

agem

ent i

nfor

mat

ion

syst

em (s

ee p

oint

19)

. It w

as an

ticip

ated

that

this

syst

em w

ill

be ro

lled

out t

o fiv

e lin

e min

istri

es an

d co

ver 6

0%of

pub

lic ex

pend

iture

s by

2005

, but

this

is no

w

the l

ikel

y ta

rget

for 2

006.

The

audi

ts o

f the

stat

e acc

ount

s by

the A

dmin

istra

tive T

ribun

al ar

e not

ac

cess

ible

to th

e Moz

ambi

can

publ

ic b

ut m

ade a

vaila

ble o

nly

to th

e gov

ernm

ent,

the A

ssem

bly o

f th

e R

epub

lic a

nd th

e do

nors

. U

p to

now

, the

key

fisc

al in

form

atio

n is

also

extre

mel

y di

fficu

lt to

acce

ss an

d un

ders

tand

and

it is

not e

lect

roni

cally

avai

labl

e. In

200

5, h

owev

er, M

PF in

tend

s to

publ

ish th

e QB

ERs o

n th

e int

erne

t in

a m

ore

com

preh

ensi

ble

form

at. A

lso

the

MTF

F sh

ould

bec

ome

a pu

blic

doc

umen

t.

Gen

eral

Bud

get S

uppo

rt in

Moz

ambi

que

(236

)

No.

Su

bjec

t Sc

ore

2001

Sc

ore

2004

T

rend

C

omm

ents

and

Ana

lysis

C

. BU

DG

ET

CY

CL

E

C(i)

Pol

icy-

base

d B

udge

ting

6 Id

entif

icat

ion

of p

over

ty-

redu

cing

exp

endi

ture

(Id

entif

ied

thro

ugh

use

of

clas

sific

atio

n sy

stem

)

C C

Impr

ovin

g Th

e de

finiti

on o

f “po

verty

-red

ucin

g sp

endi

ng”

is b

road

ly d

efin

ed in

Moz

ambi

que.

Ow

ing

to

this

ext

rem

ely

broa

d de

finiti

on, c

urre

nt b

road

def

initi

onal

cla

ssifi

catio

n is

abl

e to

iden

tify

pove

rty-r

educ

ing

spen

ding

. The

fact

that

onl

y ag

greg

ate l

evel

info

rmat

ion

on p

over

ty-re

duci

ng

spen

ding

mak

es i

t al

mos

t im

poss

ible

to

asse

ss w

heth

er t

he G

OM

’s p

ublic

spe

ndin

g is

ef

fect

ivel

y ta

cklin

g po

verty

. Th

e G

OM

cat

egor

ises

pov

erty

-red

ucin

g sp

endi

ng b

y “P

riorit

y A

reas

” an

d “C

ompl

emen

tary

A

reas

”.12

Prio

rity

area

s co

nsis

ts o

f abo

ut 6

5% o

f tot

al s

pend

ing

of G

OM

and

“pr

iorit

y” a

nd

“com

plem

enta

ry”

area

s m

ake

up a

bout

90%

of t

otal

spen

ding

. In

fact

alm

ost a

ll sp

endi

ng in

pr

iorit

y se

ctor

s is r

egar

ded

as b

eing

pov

erty

-red

ucin

g sp

endi

ng.

The c

urre

nt cl

assi

ficat

ion

syst

em o

f the

GO

M d

oes n

ot m

eet t

he re

quire

men

t for

this

indi

cato

r. PI

–11

Ord

erlin

ess a

nd p

artic

ipat

ion

in th

e an

nual

bud

get p

roce

ss

W

eak

Impr

ovin

g Th

e en

gage

men

t of m

ost l

ine

min

istri

es in

the

budg

et p

roce

ss is

ver

y lim

ited

and

thei

r cap

acity

fo

r pla

nnin

g an

d bu

dget

ing

rem

ains

wea

k. D

ialo

gue b

etw

een

MPF

and

the l

ine m

inist

ries s

eldo

m

take

s pl

ace.

Lin

e m

inis

tries

hav

e lim

ited

ince

ntiv

es to

arg

ue w

ith M

PF fo

r th

eir

shar

e in

the

avai

labl

e re

sour

ce e

nvel

ope,

as

it is

stil

l m

uch

easi

er t

o ga

ther

don

or r

esou

rces

out

side

the

fr

amew

ork

(off

-bud

get f

unds

). M

oreo

ver,

the l

imite

d se

ctor

al ex

perti

se in

MPF

mak

es a

frui

tful

dial

ogue

eve

n m

ore

unlik

ely.

Nev

erth

eles

s, in

the

con

text

of

PAR

PA,

a sl

ight

shi

ft in

the

di

rect

ion

of m

ore

inte

grat

ed p

lann

ing

can

be o

bser

ved.

12 T

he P

riorit

y A

reas

are

: edu

catio

n; h

ealth

; agr

icul

ture

and

rura

l dev

elop

men

t; ba

sic

infra

stru

ctur

e; g

ood

gove

rnan

ce a

nd m

acro

econ

omic

and

fina

ncia

l man

agem

ent.

The

Com

plem

enta

ry A

reas

are

: em

ploy

men

t and

bus

ines

s de

velo

pmen

t; so

cial

act

ion;

hou

sing

; min

es; f

ishe

ries;

tour

ism

; ind

ustry

; tra

nspo

rt an

d co

mm

unic

atio

ns te

chno

logy

; the

en

viro

nmen

t; an

d pr

otec

tion

agai

nst n

atur

al d

isas

ters

.

Ann

ex 4

A: S

tatu

s an

d Tr

ends

in P

FM

(237

)

No.

Su

bjec

t Sc

ore

2001

Sc

ore

2004

T

rend

C

omm

ents

and

Ana

lysis

PI–1

2 M

ulti-

year

per

spec

tive

in fi

scal

pl

anni

ng, e

xpen

ditu

re p

olic

y an

d bu

dget

ing

W

eak

Impr

ovin

g

7 Q

ualit

y of

mul

tiyea

r exp

endi

ture

pr

ojec

tions

(P

roje

ctio

ns a

re in

tegr

ated

into

bu

dget

form

ulat

ion)

B B

Stab

le

The

budg

et f

orm

ulat

ion

lack

s a

clea

r po

licy

basi

s. A

n ef

fect

ive

link

betw

een

budg

etin

g an

d st

rate

gic

plan

ning

, as

refle

cted

in th

e PA

RPA

and

the

PES,

is m

issi

ng. B

udge

t for

mul

atio

n is

mai

nly

incr

emen

tal

with

lim

ited

atte

ntio

n to

allo

cativ

e ef

ficie

ncy

and

polic

y pr

iorit

ies.

The

MTF

F (C

FMP)

doe

s no

t rea

ch th

e po

litic

al le

vel.

The

MTF

F is

onl

y us

ed a

s a

tool

for f

isca

l di

scip

line

by fi

xing

the

ceili

ngs

for s

pend

ing

units

in th

e ea

rly p

hase

s of

the

budg

et c

ycle

. In

prac

tice

it ha

s no

real

mea

ning

and

app

licat

ion.

In

the

near

futu

re, t

he G

OM

inte

nds

to in

crea

se th

e ro

le o

f the

MTF

F by

form

alis

ing

it at

the

stra

tegi

c an

d po

licy

leve

l, an

d su

bseq

uent

ly m

ake

it pa

rt of

the

bud

getin

g fr

amew

ork,

and

pu

blic

ly a

vaila

ble.

Due

to th

e la

ck o

f cap

acity

in b

udge

ting

proc

ess,

the

upgr

adin

g of

the

MTF

F in

to a

n al

loca

tive

tool

(suc

h as

MTE

F) h

as in

rece

nt y

ears

rece

ived

less

atte

ntio

n th

an in

the

late

19

90s.

The l

imite

d bu

dget

com

preh

ensi

vene

ss h

as d

isco

urag

ed th

is p

roce

ss. C

onse

quen

tly, l

arge

am

ount

s of d

onor

fund

s go

stra

ight

to th

e lin

e m

inis

tries

or e

ven

to p

roje

cts.

If th

e G

OM

wer

e ab

le to

stre

ngth

en it

s bud

getin

g ca

paci

ty in

the c

omin

g ye

ars,

the i

ntro

duct

ion

of M

TEF,

toge

ther

w

ith so

me p

rogr

amm

e-ba

sed

budg

etin

g at

a la

ter s

tage

, wou

ld b

e cru

cial

step

s tow

ards

impr

ovin

g th

e lin

k be

twee

n st

rate

gy, b

udge

t, ou

tput

s and

impa

cts.

Furth

erm

ore,

the

diff

eren

t stra

tegy

and

revi

ew d

ocum

ents

of t

he G

OM

are

inte

nded

to

beco

me

mor

e st

ream

lined

and

con

sist

ent.

Firs

t, th

e go

vern

men

t pla

ns th

at th

e PE

S w

ill

beco

me

mor

e in

tegr

ated

and

the

link

betw

een

the

PES

and

the

PAF

mat

rix w

ill b

e st

reng

then

ed. S

econ

d, it

is th

e in

tent

ion

to m

ake

the

revi

ew d

ocum

ents

(Bal

anço

do

PES

– B

dPES

, bud

get e

xecu

tion

repo

rts, a

nd v

ario

us m

onito

ring

repo

rts) m

ore

cons

iste

nt. S

uch

adju

stm

ents

mig

ht c

ontri

bute

to im

prov

ed c

oher

ence

and

ow

ners

hip

for t

hese

inst

rum

ents

, an

d m

ight

stre

ngth

en th

e lin

k be

twee

n pl

anni

ng, b

udge

ting

and

mon

itorin

g.

Gen

eral

Bud

get S

uppo

rt in

Moz

ambi

que

(238

)

No.

Su

bjec

t Sc

ore

2001

Sc

ore

2004

T

rend

C

omm

ents

and

Ana

lysis

C

(ii) P

redi

ctab

ility

and

Con

trol

in

Bud

get E

xecu

tion

PI–1

3 Tr

ansp

aren

cy o

f tax

paye

r ob

ligat

ions

and

liab

ilitie

s

PI–1

4 Ef

fect

iven

ess o

f mea

sure

s for

ta

xpay

er re

gist

ratio

n an

d ta

x as

sess

men

t

PI–1

5 Ef

fect

iven

ess i

n co

llect

ion

of ta

x pa

ymen

ts

mod

erat

e

Ove

r the

last

dec

ade,

the

GO

M h

as c

arrie

d ou

t sig

nific

ant t

ax a

dmin

istra

tion

refo

rms a

imed

at

incr

easi

ng d

omes

tic re

venu

e and

ther

efor

e red

ucin

g th

e med

ium

-term

dep

ende

nce o

n fo

reig

n ai

d.

A s

tream

linin

g op

erat

ion

of t

he t

ax s

yste

m s

tarte

d in

199

3. T

he o

utso

urci

ng o

f cu

stom

s m

anag

emen

t to

a priv

ate f

irm in

199

7 an

d th

e int

rodu

ctio

n of

VA

T in

199

9 w

ere p

art o

f the

se ta

x re

form

s.In

200

2, th

e G

OM

furth

er si

mpl

ified

its t

ax sy

stem

and

its a

dmin

istra

tion

by re

duci

ng

the

mar

gina

l rat

es a

nd b

y in

trodu

cing

a n

ew ta

x la

w a

nd a

new

fisc

al in

cent

ive

code

. In

2003

, it

intro

duce

d ne

w in

com

e ta

xes

(indi

vidu

al a

nd c

orpo

rate

inco

me)

and

a m

otor

veh

icle

tax,

and

in

crea

sed

the

fuel

tax.

As

a re

sult

of th

ese

refo

rms,

gove

rnm

ent r

even

ue a

s a

shar

e of

GD

P in

crea

sed

from

12%

in 1

999

to 1

4.3%

in 2

003.

Tax

col

lect

ion

was

bel

ow ta

rget

for 2

004.

The

G

DP

figur

es a

re b

eing

revi

sed

but t

he W

orld

Ban

k C

ount

ry E

cono

mic

Mem

oran

dum

(CEM

) 20

05 es

timat

es th

at ta

x co

llect

ion

for 2

004

was

12%

of G

DP.

Cur

rent

ly th

e GO

M is

pre

parin

g th

e le

gisl

ativ

e an

d in

stitu

tiona

l fra

mew

ork

for t

he c

reat

ion

of a

CR

A.

PI–1

6 Pr

edic

tabi

lity

in th

e av

aila

bilit

y of

fu

nds f

or c

omm

itmen

t of

expe

nditu

res

W

eak

St

able

B

ecau

se o

f a

seas

onal

pat

tern

in

the

gove

rnm

ent’s

ow

n in

com

e as

wel

l as

del

ays

and

low

pr

edic

tabi

lity

of d

onor

dis

burs

emen

ts, t

he G

OM

ofte

n fa

ces c

ash

flow

con

stra

ints

, esp

ecia

lly in

th

e firs

t six

mon

ths o

f the

yea

r. A

s a co

nseq

uenc

e, th

e Tre

asur

y ha

s to

cut o

r pos

tpon

e tra

nsfe

rs to

th

e sp

endi

ng u

nits

. Thi

s is

why

, esp

ecia

lly in

the

first

few

mon

ths

of th

e fis

cal y

ear,

spen

ding

un

its h

ave

limite

d ac

cess

to re

sour

ces.

At t

he b

egin

ning

of t

he fi

scal

yea

r, th

e Tr

easu

ry p

rovi

des

an a

dvan

ce to

the

spen

ding

uni

ts o

f 2/

12 o

f th

e pl

anne

d an

nual

exp

endi

ture

. Spe

ndin

g un

its h

ave

to r

epor

t on

thei

r ex

pend

iture

s be

fore

they

rece

ive

furth

er d

isbu

rsem

ents

. The

Tre

asur

y af

firm

s th

at th

e tra

nsfe

r of a

dditi

onal

fu

ndin

g ha

s of

ten

been

del

ayed

by

irreg

ular

ities

and

poo

r qua

lity

repo

rting

(in

resp

ect o

f the

re

porti

ng re

quire

men

ts) a

nd b

y sl

ow d

eliv

ery

of th

e re

quire

d ju

stifi

catio

n. S

pend

ing

units

stat

e th

at T

reas

ury

is sl

ow in

giv

ing

feed

back

on

thei

r rep

orts

. Th

e in

trodu

ctio

n of

SIS

TAFE

is e

xpec

ted

to a

ddre

ss k

ey w

eakn

esse

s, bu

t not

cle

ar if

this

is

suff

icie

nt to

ove

rcom

e m

ajor

wea

knes

ses.

GB

S be

com

ing

mor

e pr

edic

tabl

e si

nce

2004

.

Ann

ex 4

A: S

tatu

s an

d Tr

ends

in P

FM

(239

)

No.

Su

bjec

t Sc

ore

2001

Sc

ore

2004

T

rend

C

omm

ents

and

Ana

lysis

PI–1

7 R

ecor

ding

and

man

agem

ent o

f ca

sh b

alan

ces,

debt

and

gua

rant

ees

W

eak

Impr

ovin

g V

irtua

l uni

fied

acco

unts

as o

f 200

4 an

d co

ntin

ued

wor

k on

esta

blis

hing

sing

le ac

coun

t im

prov

ed

situ

atio

n gr

eatly

. PI

–18

Effe

ctiv

enes

s of p

ayro

ll co

ntro

ls

Fi

rst e

limin

atio

n of

“gh

ost w

orke

rs”

carr

ied

out,

mor

e lin

king

of s

kills

to p

osts

and

to s

alar

y le

vel,

but o

vera

ll lit

tle k

now

n ab

out h

ow g

ood

cont

rols

are

. PI

–19

Com

petit

ion,

val

ue fo

r mon

ey a

nd

cont

rols

in p

rocu

rem

ent

W

eak

16

Effe

ctiv

e pr

ocur

emen

t (P

rocu

rem

ent p

roce

sses

pro

mot

e co

mpe

titio

n, tr

ansp

aren

cy a

nd

valu

e-fo

r-m

oney

)

C

Proc

urem

ent r

ules

and

regu

latio

ns a

re w

eak

and

ofte

n no

t fol

low

ed. A

war

enes

s with

in th

e ci

vil

serv

ice o

f the

se ru

les i

s als

o lim

ited.

The

syst

em is

also

vul

nera

ble t

o co

rrup

tion

owin

g to

lack

of

trans

pare

ncy.

A

cohe

rent

and

com

preh

ensi

ve re

form

of t

he ce

ntra

l pro

cure

men

t sys

tem

is re

quire

d. In

som

e lin

e m

inis

tries

, don

ors a

re p

rovi

ding

supp

ort t

o in

trodu

ce b

ette

r pro

cure

men

t pra

ctic

es. S

ome t

rain

ing

has b

een

prov

ided

, but

this

has

not

resu

lted

in a

fund

amen

tal c

hang

e in

pro

cure

men

t pra

ctic

es.

The

GO

M h

as s

tarte

d th

e dr

aftin

g of

a n

ew p

rocu

rem

ent

code

, bu

t ov

eral

l pr

ogre

ss i

n pr

ocur

emen

t ref

orm

has

bee

n sl

ow.13

A

s de

taile

d in

the

Moz

ambi

que

CPA

R c

ondu

cted

in M

ay, 2

002,

Moz

ambi

que’

s pr

ocur

emen

t sy

stem

has

serio

us in

stitu

tiona

l, le

gisl

ativ

e, an

d hu

man

reso

urce

wea

knes

ses w

hich

hav

e a se

rious

ne

gativ

e im

pact

on

the

use

of g

over

nmen

t res

ourc

es a

nd th

ose

from

don

or a

nd in

tern

atio

nal

orga

nisa

tions

. The

se w

eakn

esse

s af

fect

eve

ry s

ecto

r of

pub

lic p

rocu

rem

ent a

nd c

omm

erci

al

activ

ities

. Th

e GO

M h

as n

o ad

equa

te le

gal a

nd re

gula

tory

fram

ewor

k fo

r pro

cure

men

t. In

addi

tion,

ther

e are

no

regu

latio

ns c

once

rnin

g pr

ocur

emen

t of s

ervi

ces,

apar

t fro

m a

few

rule

s on

the

sele

ctio

n of

co

nsul

tant

s for

des

ign

and

supe

rvis

ion

of c

ivil

wor

ks c

ontra

cts.

No

new

pro

cure

men

t law

s an

d re

gula

tions

hav

e bee

n re

leas

ed su

itabl

e to

rece

nt g

over

nmen

t dec

entra

lisat

ion

prog

ram

mes

, thu

s ef

fect

ivel

y po

stpo

ning

any

eff

ectiv

e tra

nsfe

r of a

utho

rity

to th

e Pr

ovin

ces.

Con

sequ

ently

, cor

rupt

ion

pres

ents

a se

rious

pro

blem

in M

ozam

biqu

e. H

owev

er, t

he G

OM

has

m

ade s

ome p

rogr

ess i

n im

prov

ing

the t

rans

pare

ncy

of p

ublic

pro

cure

men

t sys

tem

. For

exam

ple,

in

Apr

il 20

04, a

pro

cure

men

t law

ena

cted

in 1

996

whi

ch p

erm

itted

bid

ders

to m

ake p

aym

ents

to

proc

urem

ent a

t the

min

iste

rial l

evel

are

hel

ping

to in

culc

ate

pock

ets o

f bet

ter p

ract

ice.

13 In

200

2, th

e C

ount

ry P

rocu

rem

ent A

sses

smen

t Rep

ort (

CPA

R) o

f the

Wor

ld B

ank

mad

e a

serie

s of

pro

posa

ls h

ow to

add

ress

the

curr

ent w

eakn

esse

s in

the

proc

urem

ent

syst

em.

Gen

eral

Bud

get S

uppo

rt in

Moz

ambi

que

(240

)

No.

Su

bjec

t Sc

ore

2001

Sc

ore

2004

T

rend

C

omm

ents

and

Ana

lysis

PI–2

0 Ef

fect

iven

ess o

f int

erna

l con

trols

fo

r non

-sal

ary

expe

nditu

re

W

eak

impr

ovin

g

PI–2

1 Ef

fect

iven

ess o

f int

erna

l aud

it

Wea

k

Impr

ovin

g 9

Qua

lity

of in

tern

al a

udit

(E

ffect

ive

inte

rnal

aud

it fu

nctio

n)

B A

The

qual

ity o

f int

erna

l con

trol a

nd a

udits

in th

e pu

blic

sec

tor i

s st

ill u

nder

deve

lope

d, b

ut th

e In

tern

al In

spec

tora

te o

f MPF

(IG

F) o

f MPF

has

bee

n su

bjec

t to

sign

ifica

nt re

form

s. Th

is re

form

pr

oces

s sta

rted

in 1

996

with

con

tinuo

us te

chni

cal a

nd fi

nanc

ial s

uppo

rt, m

ainl

y fr

om S

wed

en.

Step

-by-

step

IG

F is

impl

emen

ting

its o

wn

stra

tegi

c pl

an a

nd is

bui

ldin

g a

cont

rol a

nd a

udit

cultu

re w

ithin

the p

ublic

sect

or. I

n re

cent

yea

rs, i

t has

recr

uite

d la

rger

num

bers

and

bette

r-ski

lled

staf

f (cu

rren

t pro

fess

iona

l sta

ff n

umbe

r: 12

6) a

nd h

as b

een

train

ing

its e

xist

ing

staf

f.IG

F al

so

supe

rvis

es an

d pr

ovid

es tr

aini

ng an

d ad

vice

to th

e ins

pect

orat

es o

f oth

er m

inist

ries.

It ha

s rec

ently

pr

epar

ed a

stra

tegi

c (5-

year

) and

actio

n pl

an fo

r the

stre

ngth

enin

g of

inte

rnal

audi

t fun

ctio

ns. T

his

plan

nee

ds to

be

agre

ed in

the

new

coo

rdin

atio

n co

unci

l for

con

trol a

nd a

udit.

14In

the

Join

t R

evie

w 2

004

it w

as a

gree

d th

at th

e 20

05 P

ES a

nd P

AF

wou

ld c

onta

in m

easu

rabl

e ta

rget

s fo

r pr

ogre

ss in

this

act

ion

plan

. In

the

com

ing

year

s, th

e fu

rther

int

rodu

ctio

n of

SIS

TAFE

, th

e ne

w i

nteg

rate

d fin

anci

al

man

agem

ent i

nfor

mat

ion

syst

em, m

ight

lead

to fu

rther

and

mor

e ef

ficie

nt in

tern

al c

ontro

l and

au

dits

. A k

ey co

ncer

n w

ith re

gard

to S

ISTA

FE, h

owev

er, i

s the

cont

inuo

us re

visi

on o

f cha

nge i

n im

plem

enta

tion

dead

lines

. Th

e in

tern

al c

ontro

l sys

tem

rem

ains

wea

kan

d ve

ry in

effe

ctiv

e. M

ozam

biqu

e’s i

nter

nal c

ontro

l sy

stem

, inh

erite

d fr

om th

e Por

tugu

ese s

yste

m, h

as v

ery

stro

ng ex

ante

cont

rol s

yste

m o

f pay

men

t. H

owev

er, i

t is

fair

to s

ay th

at o

vera

ll in

tern

al c

ontro

l sys

tem

suf

fers

fro

m la

ck o

f fin

anci

al

reso

urce

s and

hum

an c

apac

ity o

f IG

F, w

hich

is in

cha

rge

of in

tern

al c

ontro

l, in

clud

ing

inte

rnal

au

dit.

IGF

suff

ers f

rom

a la

ck o

f qua

lifie

d st

aff a

nd a

dear

th o

f fin

anci

al re

sour

ces,

trans

porta

tion

equi

pmen

t and

com

pute

rs th

at u

nder

min

e its

pro

per f

unct

ioni

ng. F

ew s

taff

hol

d in

tern

atio

nal

acco

untin

g qu

alifi

catio

ns.

On

the o

ther

han

d, so

me i

mpr

ovem

ents

hav

e bee

n m

ade.

Sin

ce 2

004,

the I

GF

has i

ts o

wn

budg

et

line

and

ther

efor

e m

ater

ial

and

logi

stic

s co

nditi

ons

are

expe

cted

to

impr

ove.

IG

F ha

s be

en

stre

ngth

ened

by

hirin

g 30

new

staf

f and

it re

ceiv

es te

chni

cal a

ssis

tanc

e fro

m S

ida.

An

actio

n pl

an

that

seek

s to

enha

nce

capa

city

and

to a

sser

t IG

F’s r

ole

is b

eing

des

igne

d an

d im

plem

ente

d.

Ann

ex 4

A: S

tatu

s an

d Tr

ends

in P

FM

(241

)

No.

Su

bjec

t Sc

ore

2001

Sc

ore

2004

T

rend

C

omm

ents

and

Ana

lysis

C

(iii)

Acc

ount

ing,

Rec

ordi

ng a

nd

Rep

ortin

g

PI–2

2 Ti

mel

ines

s and

regu

larit

y of

ac

coun

ts re

conc

iliat

ion

W

eak

Impr

ovin

g So

far n

ot m

uch

chan

ge, t

houg

h SI

STA

FE p

rovi

des p

oten

tial f

or d

ram

atic

impr

ovem

ents

.

11

Qua

lity

of fi

scal

/ban

king

dat

a re

conc

iliat

ion

(Sat

isfac

tory

and

tim

ely

reco

ncili

atio

n of

fisc

al a

nd

mon

etar

y da

ta)

C B

Th

e GO

M h

olds

its b

ank

acco

unt i

n th

e cen

tral b

ank

as w

ell a

s in

num

erou

s com

mer

cial

ban

ks.

In th

e beg

inni

ng o

f 200

4, it

was

estim

ated

that

the G

OM

had

alm

ost 4

,500

activ

e ban

k ac

coun

ts (o

f an

estim

ated

12,

000)

. The

refo

re, i

t is

fair

to c

oncl

ude

that

sat

isfa

ctor

y re

conc

iliat

ion

of

GO

M b

ank

acco

unts

with

acc

ount

ing

reco

rds

does

not

occ

ur, a

nd th

us th

e be

nchm

ark

is n

ot

met

. One

of t

he re

ason

s for

the e

xces

sive

pro

lifer

atio

n is

the l

ack

of re

gula

tions

for m

aint

aini

ng

gove

rnm

ent a

ccou

nts.

Cur

rent

ly, t

he G

OM

is im

plem

entin

g a

sing

le tr

easu

ry a

ccou

nt.

Ano

ther

poi

nt w

hich

sho

uld

be s

tress

ed is

rela

ted

to th

e la

ck o

f com

plia

nce

with

the

cent

ral

bank

’s ru

les

of c

heck

com

pens

atio

n. In

this

cas

e, b

esid

es p

ract

ical

diff

icul

ties

give

n by

the

enor

mou

s am

ount

of b

ank

acco

unts

, rec

onci

liatio

n ta

kes

a lo

nger

tim

e be

caus

e co

mm

erci

al

bank

s ofte

n br

each

the

regu

lar c

ompe

nsat

ion

chec

k pe

riod.

W

ith th

e ex

pect

ed im

plem

enta

tion

of S

ISTA

FE, a

ll tre

asur

y ac

coun

ts (c

entra

l and

pro

vinc

ial

leve

ls) w

ill b

e br

ough

t to

the

cent

ral b

ank;

ope

ning

an

acco

unt w

ith b

e or

dere

d on

ly b

y th

e Tr

easu

ry an

d th

eref

ore p

aym

ents

will

be m

ade e

xclu

sive

ly b

y th

e e-S

ISTA

FE. T

his w

ill fi

nally

le

ad th

e G

OM

to h

ave

all i

ts b

ank

acco

unts

reco

ncili

atio

n to

be

done

on-

line.

PI

–23

Ava

ilabi

lity

of in

form

atio

n on

re

sour

ces r

ecei

ved

by se

rvic

e de

liver

y un

its

W

eak

Impr

ovin

g A

ntiq

uate

d "a

dvan

ces"

sys

tem

mea

nt f

unds

-flo

w t

hrou

gh y

ear

very

une

ven,

unp

redi

ctab

le.

Cou

pled

with

freq

uent

cent

ral c

ash-

flow

pro

blem

s, th

is m

eant

serio

us p

robl

ems g

ettin

g fu

nds o

ut

to sp

endi

ng u

nits

. SIS

TAFE

add

ress

ing

this

issu

e.

10

Use

of e

xpen

ditu

re tr

acki

ng

surv

eys

(Tra

ckin

g us

ed o

n re

gula

r bas

is)

C C

Stab

le

In 2

002

an E

TSD

S w

as u

nder

take

n as

a p

ilot s

urve

y of

the

prim

ary

heal

th sy

stem

to tr

ack

the

trans

fer o

f fun

ds fr

om th

e ce

ntra

l gov

ernm

ent,

to th

e pr

ovin

ces,

dist

ricts

and

hea

lth p

osts

. It

was

hig

hly

succ

essf

ul. H

owev

er, t

o da

te, n

o ad

ditio

nal p

ublic

exp

endi

ture

trac

king

sur

vey

(PET

S) i

s sc

hedu

led

in M

ozam

biqu

e an

d th

eref

ore,

PET

S is

not

yet

a r

egul

ar f

eatu

re o

f ex

pend

iture

man

agem

ent s

yste

m. T

he b

ench

mar

k is

not

met

. PI

–24

Qua

lity

and

timel

ines

s of i

n-ye

ar

budg

et re

ports

Wea

k Im

prov

ing

Rep

orts

mor

e com

preh

ensi

ve, r

egul

ar, s

till d

iffic

ult t

o re

ad, n

ot fu

lly co

nsis

tent

, not

acce

ssib

le to

pu

blic

.

Gen

eral

Bud

get S

uppo

rt in

Moz

ambi

que

(242

)

No.

Su

bjec

t Sc

ore

2001

Sc

ore

2004

T

rend

C

omm

ents

and

Ana

lysis

12

Tim

elin

ess o

f int

erna

l bud

get

repo

rts

(Mon

thly

exp

endi

ture

repo

rts

prov

ided

with

in fo

ur w

eeks

of

end

of m

onth

)

C B

Th

e M

PF p

ublis

hes q

uarte

rly re

ports

usu

ally

with

in 2

mon

ths o

f the

end

of t

he re

leva

nt

quar

ters

, whi

ch in

dica

tes t

hat i

nter

nal r

epor

ts b

y sp

endi

ng u

nits

are

not

subm

itted

to th

e M

PF

with

in 4

wee

ks. B

esid

es th

e qu

estio

n of

tim

elin

ess a

nd re

gula

rity,

the

quar

terly

bud

get

exec

utio

n re

ports

nee

d to

be

furth

er im

prov

ed in

use

fuln

ess f

or d

ecis

ion-

mak

ing

and

cove

rage

. The

se re

ports

pre

sent

act

ual e

xpen

ditu

res,

both

cur

rent

and

inve

stm

ent,

com

pare

d w

ith th

e bu

dget

allo

catio

n ac

cord

ing

to th

e ec

onom

ic a

nd te

rrito

rial c

lass

ifica

tions

. Act

ual

expe

nditu

res a

re a

lso

repo

rted

follo

win

g th

e fu

nctio

nal a

nd in

stitu

tiona

l cla

ssifi

catio

ns b

ut

with

no

com

paris

on to

cor

resp

ondi

ng b

udge

t allo

catio

ns. I

t is n

ot e

asy

to a

sses

s bud

geta

ry

perf

orm

ance

sinc

e si

mpl

e co

mpa

rison

with

the

budg

et fi

gure

s pub

lishe

d in

the

budg

et

docu

men

t may

be

mis

lead

ing,

ow

ing

to a

djus

tmen

ts in

trodu

ced

in th

e fis

cal y

ear.

Thes

e re

ports

do

not m

eet t

he c

riter

ia o

f the

HIP

C p

ublic

exp

endi

ture

trac

king

whi

ch

stip

ulat

es th

at fi

scal

repo

rts sh

ould

cov

er a

t lea

st 9

0% o

f lin

e m

inis

try sp

endi

ng b

y va

lue

sinc

e th

e bu

dget

cov

erag

e re

mai

ns p

artia

l. 13

Cl

assi

ficat

ion

used

for t

rack

ing

pove

rty-r

educ

ing

expe

nditu

res

(Goo

d-qu

ality

, tim

ely

func

tiona

l re

porti

ng d

eriv

ed fr

om

clas

sific

atio

n sy

stem

)

B B

Impr

ovin

g G

iven

the

broa

d ca

tego

risat

ion

of p

over

ty-r

educ

ing

defin

ition

, the

fisc

al re

ports

, whi

ch sh

ow

func

tiona

l cl

assi

ficat

ion

only

at

aggr

egat

e le

vel,

can

iden

tify

and

repo

rt po

verty

-red

ucin

g sp

endi

ng o

n a

func

tiona

l bas

is. T

his

broa

d ca

tego

risat

ion

is n

ot s

uffic

ient

eno

ugh

to a

llow

as

sess

men

t of t

he e

xten

t to

whi

ch th

e ov

eral

l gov

ernm

ent s

pend

ing

is p

ro-p

oor.

As

deta

iled

abov

e fo

r in

dica

tor

5 th

ere

are

issu

es o

f ac

cura

cy a

nd u

sefu

lnes

s of

sub

-fun

ctio

n-le

vel

info

rmat

ion,

for s

igni

fican

t por

tions

of e

xpen

ditu

re c

lass

ified

as “

othe

rs”.

Th

e qu

arte

rly b

udge

t ex

ecut

ion

repo

rts p

rese

nt a

ctua

l ex

pend

iture

s, bo

th r

ecur

rent

and

in

vest

men

t, co

mpa

red

with

the

budg

et a

lloca

tion

(as

mod

ified

dur

ing

the

year

) acc

ordi

ng to

ec

onom

ic a

nd t

errit

oria

l cl

assi

ficat

ions

. A

ctua

l ex

pend

iture

s ar

e al

so r

epor

ted

follo

win

g fu

nctio

nal a

nd in

stitu

tiona

l cla

ssifi

catio

ns, b

ut n

o co

mpa

rison

is p

rovi

ded

for t

he co

rresp

ondi

ng

budg

et a

lloca

tion

unde

r th

ese

two

clas

sific

atio

ns.

Com

paris

on w

ith t

he b

udge

t fig

ures

pu

blis

hed

in t

he b

udge

t do

cum

ent

may

the

refo

re b

e m

isle

adin

g, o

win

g to

adj

ustm

ents

in

trodu

ced

durin

g th

e fis

cal y

ear.

Reg

ardi

ng fu

nctio

nal c

lass

ifica

tion,

a si

gnifi

cant

por

tion

are

clas

sifie

d as

oth

ers s

ince

spen

ding

agen

cies

cate

goris

e the

ir sp

endi

ng o

nly

by o

rgan

isat

ion

and

Min

istry

of F

inan

ce re

clas

sify

them

into

func

tion

on e

x po

st b

asis

. Im

prov

emen

ts a

re u

nder

way

in 2

005,

with

the

impl

emen

tatio

n of

the

new

func

tion

and

sub-

func

tion

clas

sific

atio

n an

d lin

e m

inis

tries

will

be

requ

ired

to p

rope

rly c

lass

ify t

heir

expe

nditu

res.

Onl

y af

ter t

he in

trodu

ctio

n of

pro

gram

mat

ic b

udge

ting,

whi

ch is

in th

e pip

elin

e,

can

real

cla

rific

atio

n be

exp

ecte

d. T

he p

rogr

amm

e –

inst

ead

of t

he a

genc

y –

shou

ld b

e cl

assi

fied

by fu

nctio

ns a

nd a

llow

a b

ette

r ass

essm

ent o

f the

ext

ent t

o w

hich

the

gove

rnm

ent

spen

ding

is p

ro-p

oor.

Ann

ex 4

A: S

tatu

s an

d Tr

ends

in P

FM

(243

)

No.

Su

bjec

t Sc

ore

2001

Sc

ore

2004

T

rend

C

omm

ents

and

Ana

lysis

PI–2

5 Q

ualit

y an

d tim

elin

ess o

f ann

ual

finan

cial

stat

emen

ts

14

Tim

elin

ess o

f acc

ount

s clo

sure

(A

ccou

nts c

lose

d wi

thin

two

mon

ths o

f yea

r-en

d)

A B

A

s SI

STA

FE is

bei

ng im

plem

ente

d th

e co

mpl

emen

tary

per

iod

to c

lose

acc

ount

s w

as b

eing

lim

ited

to 2

mon

ths i

n 20

03 a

nd te

ntat

ivel

y ze

ro fo

r 200

4.

The B

udge

t Exe

cutio

n R

epor

t cov

ers o

nly

abou

t 70%

of s

pend

ing

but t

his w

eakn

ess i

s mos

tly

to d

o w

ith th

e re

porti

ng o

f don

or-f

unde

d ex

pend

iture

s.

C

(iv) E

xter

nal S

crut

iny

and

Aud

it

PI–2

6 Sc

ope,

nat

ure

and

follo

w-u

p of

ex

tern

al a

udit

W

eak

Impr

ovin

g R

espo

nse

to a

udit

now

seen

as m

uch

mor

e se

rious

, com

mitt

ed, w

ith a

udit

repo

rt pr

ovid

ing

first

se

t of e

xcha

nges

bet

wee

n pa

rties

, per

mitt

ing

mon

itorin

g.

15

Tim

elin

ess o

f fin

al a

udite

d ac

coun

ts

(Aud

ited

acco

unts

pres

ente

d to

le

gisla

ture

with

in o

ne y

ear)

C C

Th

e su

prem

e au

dit

inst

itutio

n of

Moz

ambi

que,

the

Adm

inis

trativ

e Tr

ibun

al,

is a

you

ng

(est

ablis

hed

in 1

997)

org

anis

atio

n th

at p

repa

red

its fi

rst a

udit

of th

e sta

te ac

coun

ts in

200

0. It

is

still

a ra

ther

wea

k an

d un

ders

taffe

d or

gani

satio

n w

ith in

suff

icie

nt re

sour

ces

to c

arry

out

the

requ

ired

task

s, al

thou

gh th

e qu

ality

of i

ts a

uditi

ng w

ork

has

incr

ease

d si

gnifi

cant

ly in

rece

nt

year

s, in

term

s of t

he ti

me n

eede

d to

per

form

the y

early

audi

t of s

tate

acco

unts

as w

ell a

s in

the

qual

ity o

f aud

its.

The

Adm

inis

trativ

e Tr

ibun

al p

rese

nted

its

audi

t of

the

Gen

eral

Sta

te A

ccou

nts

for

2003

to

parli

amen

t in

Oct

ober

200

4, m

uch

fast

er th

an in

pre

viou

s yea

rs. A

ccor

ding

to th

e new

fina

ncia

l la

w, t

he M

PF h

as to

issu

e G

ener

al S

tate

Acc

ount

s by

May

, fiv

e m

onth

s afte

r the

clo

se o

f the

fis

cal y

ear,

and

the

Adm

inis

trativ

e Tr

ibun

al h

as to

del

iver

its a

udit

repo

rt on

thes

e ac

coun

ts to

pa

rliam

ent b

y O

ctob

er th

e sam

e ye

ar. T

his r

esch

edul

ing

(fro

m 2

0 m

onth

s in

the

prev

ious

law

) w

as d

iscu

ssed

dur

ing

the

Join

t Rev

iew

in 2

004.

The

aud

it of

the

stat

e ac

coun

ts is

ext

rem

ely

impo

rtant

for t

he G

BS

dono

rs, b

ecau

se th

e flo

w o

f GB

S fu

nds i

s tra

nsfe

rred

into

the

prin

cipa

l st

ate

budg

et a

ccou

nt to

be

audi

ted

annu

ally

by

the

Adm

inis

trativ

e Tr

ibun

al.

Gen

eral

Bud

get S

uppo

rt in

Moz

ambi

que

(244

)

No.

Su

bjec

t Sc

ore

2001

Sc

ore

2004

T

rend

C

omm

ents

and

Ana

lysis

PI–2

7 Le

gisl

ativ

e sc

rutin

y of

the

annu

al

budg

et la

w

M

oder

ate

Stab

le

Ass

embl

y an

d C

omm

ittee

rem

ain

reso

urce

con

stra

ined

for t

his t

ask

– no

t muc

h ch

ange

.

PI–2

8 Le

gisl

ativ

e sc

rutin

y of

ext

erna

l au

dit r

epor

ts

M

oder

ate

Stab

le

Moz

ambi

que

is s

ubje

ct to

Nap

oleo

nic

law

, mea

ning

that

the

exte

rnal

aud

iting

of t

he G

ener

al

Stat

e A

ccou

nts i

s the

func

tion

of a

cou

rt of

law

, not

an

audi

tor t

rain

ed in

acc

ount

ing.

15A

uditi

ng

(pre

- and

pos

t-aud

it) is

onl

y on

e of t

he th

ree s

peci

fic re

spon

sibi

litie

s giv

en to

the A

dmin

istra

tive

Trib

unal

by

the

cons

titut

ion.

16 T

he d

epar

tmen

t with

in th

e A

dmin

istra

tive

Trib

unal

dea

ling

with

au

dits

is re

spon

sibl

e fo

r the

aud

iting

of a

ll 80

0 pu

blic

acc

ount

ing

inst

itutio

ns b

ut h

as fe

wer

than

20

sta

ff m

embe

rs.

In 2

004

(for

200

3),

the

Adm

inis

trativ

e Tr

ibun

al g

ave

“no

obje

ctio

n ce

rtific

ates

” on

437

bod

ies

and

unde

rtook

sup

plem

enta

ry a

udits

on

just

8 o

f th

ese

(i.e.

an

extre

mel

y lo

w ra

tio o

f onl

y 1%

). In

all

eigh

t cas

es, p

robl

ems

wer

e id

entif

ied,

but

non

e of

the

proc

esse

s ha

s be

en f

inal

ised

by

the

Adm

inis

trativ

e Tr

ibun

al’s

pre

sidi

ng ju

dges

. In

2005

, 39

supp

lem

enta

ry a

udits

wer

e to

be

unde

rtake

n.

The A

ssem

bly

of th

e Rep

ublic

deb

ates

the r

epor

ts o

n th

e sta

te ac

coun

ts an

d pr

ovid

es co

mm

ents

, bu

t has

poo

r tec

hnic

al s

kills

to c

arry

out

this

task

. The

Pla

nnin

g an

d B

udge

t Com

mitt

ee o

f the

A

ssem

bly

of th

e Rep

ublic

doe

s not

hav

e a p

rofe

ssio

nal s

ecre

taria

t to

supp

ort i

ts su

perv

ising

role

. A

s a co

nseq

uenc

e, it

s rev

iew

role

is h

ampe

red

and

no fu

rther

inve

stig

atio

n ca

n be

don

e. In

rece

nt

year

s, th

e M

PF h

as b

ecom

e m

ore

resp

onsi

ve to

bot

h th

e A

dmin

istra

tive

Trib

unal

repo

rts a

nd

com

men

ts fr

om th

e Ass

embl

y of

the R

epub

lic. D

urin

g th

e don

or–g

over

nmen

t Joi

nt R

evie

ws,

the

Adm

inis

trativ

e Tr

ibun

al h

as r

ecei

ved

sign

ifica

nt a

ttent

ion.

For

ins

tanc

e, t

he 2

004

Rev

iew

di

scus

sed

the r

esou

rces

allo

cate

d to

the T

ribun

al, t

he fo

llow

-up

of T

ribun

al re

com

men

datio

ns an

d th

e re

duct

ion

of th

e tim

e la

g in

the

prep

arat

ion

of th

e au

dits

of t

he G

ener

al S

tate

Acc

ount

s.

D. D

ON

OR

PR

AC

TIC

ES

D–1

Pr

edic

tabi

lity

of D

irect

Bud

get

Supp

ort

Fr

om 2

000

to 2

003

pred

icta

bilit

y w

eak.

Sin

ce 2

004:

impr

ovin

g.

D–2

Fi

nanc

ial i

nfor

mat

ion

prov

ided

by

dono

rs fo

r bud

getin

g an

d re

porti

ng

on p

roje

ct a

nd p

rogr

amm

e ai

d

W

eak

Impr

ovin

g M

ajor

don

ors,

fund

ing

agen

cies

pro

vide

qui

te c

ompl

ete

data

, but

onl

y so

me

are

reco

rded

in

budg

et d

ocum

enta

tion,

in p

art b

ecau

se o

f pro

blem

s cla

ssify

ing,

reco

rdin

g pr

oper

ly.

4 D

ata

on d

onor

fina

ncin

g (D

onor

-fund

ed e

xpen

ditu

res

incl

uded

in b

udge

t or r

epor

ts)

B B

Impr

ovin

g A

t the

cent

ral g

over

nmen

t lev

el m

ost d

onor

-fund

ed ex

pend

iture

has

bee

n in

clud

ed in

the b

udge

t pr

epar

atio

n ev

ery

year

. In

som

e sec

tors

such

as ag

ricul

ture

thes

e exp

endi

ture

s are

alm

ost f

ully

in

clud

ed in

the

budg

et, b

ut o

win

g m

ainl

y to

the

fact

that

mos

t of t

he fi

nanc

ial m

echa

nism

s are

co

ntro

lled

and

mon

itore

d by

don

ors

prov

idin

g th

e fin

anci

ng, t

he e

xecu

tion

and

reco

rdin

g of

th

ese

expe

nditu

res i

s usu

ally

don

e of

f-bu

dget

. Th

e G

OM

tryi

ng to

rem

edy

this

situ

atio

n us

es a

mec

hani

sm in

whi

ch d

ata

are

prov

ided

by

Ann

ex 4

A: S

tatu

s an

d Tr

ends

in P

FM

(245

)

No.

Su

bjec

t Sc

ore

2001

Sc

ore

2004

T

rend

C

omm

ents

and

Ana

lysis

sect

ors

and

dono

rs. W

hene

ver

rece

ivin

g a

dono

r dis

burs

emen

t, th

e Tr

easu

ry a

dvan

ces

cash

flo

w to

the

sect

or. T

he s

ecto

r, af

ter h

avin

g sp

ent t

his

cash

flow

, pre

sent

s a

bala

nce

whi

ch is

th

en r

ecor

ded

in th

e ac

coun

ting

syst

em. T

he in

form

atio

n is

then

par

tially

pre

sent

ed in

the

Bud

get E

xecu

tion

Rep

ort a

nd in

its

tota

lity

in th

e St

ate

Gen

eral

Rep

ort –

the

final

yea

rly

acco

untin

g re

port

pres

ente

d to

par

liam

ent.

Sinc

e ac

coun

ting

is d

one

man

ually

, the

se d

onor

-fun

ded

expe

nditu

res a

re n

ot fu

lly re

cord

ed in

th

e di

ffere

nt b

udge

t lin

es u

ntil

the

follo

win

g qu

arte

r. O

n th

e ot

her

hand

, at p

rovi

ncia

l and

di

stric

t le

vels

, m

ost

dono

r-fu

nded

exp

endi

ture

is

not

even

rec

orde

d in

the

bud

get.

The

impl

emen

tatio

n of

SIS

TAFE

, jo

intly

with

eff

orts

fro

m t

he i

nter

natio

nal

partn

ers

of

Moz

ambi

que,

will

con

tinue

to

lead

to

furth

er i

mpr

ovem

ents

in

the

reco

rdin

g of

the

se

expe

nditu

res.

D–3

Pr

opor

tion

of a

id th

at is

man

aged

by

use

of n

atio

nal p

roce

dure

s

Wea

k Im

prov

ing

Bud

get s

uppo

rt in

crea

sing

as

shar

e of

tota

l aid

, and

sec

tor

aid

usin

g na

tiona

l pr

oced

ures

is

incr

easi

ng. R

elia

ble e

stim

ates

on

the

volu

me o

f off

-bud

get s

pend

ing

are

not a

vaila

ble a

nd ra

nge

from

30%

to 5

0% o

f tot

al a

id v

olum

es d

epen

ding

on

the

year

.


(246)


(247)

Annex 4B: The Off-Budget Issue 1. Definition of off-budgets: A significant proportion of donor aid and local government expenditure (“donativos”) is “off-budget”, inhibiting efficient and effective government planning and budgeting. To be fully “on-budget” refers to funds that are recorded in the original government budget (OE) (on-budget), executed through the Treasury System (on-treasury), accounted for through the public accounting system (on-accounting) and audited by the Inspectorate General of Finance (on-audit). A project or programme, which is not included in the state budget book also cannot be on-treasury, on-accounting or on-audit. Thus the further along the project or programme proceeds through the budget cycle the larger becomes the proportion of projects/programmes that will not be subject to national budgetary and accountability mechanisms. Consequently, different levels of detachment from the state budget can be found: some funds are completely off-budget and others partially on-budget. Funds can also be considered to be on-budget in a purely nominal (informational) sense; donors do not have to commit to handing over the management of their funds to the GOM in order for the funds to be included in the budget book and the quarterly and annual budget execution reports. 2. Understanding the off-budget phenomena: There are a number of reasons why some funds remain off-budget (see Cabral et al 2005 for a full review of this issue in the health sector). For example, some funds remain off-budget because line ministries enjoy greater autonomy if they, and not the Ministry of Finance, control access to donor funding. Frequently also, the problem is one of information where a line ministry lacks sufficient or timely information to record the project/programme in the state budget or to transfer information to the accounting department once funds have been executed. In other cases funds are not included in the state budget as they lack a legal basis (as in the case of some collected user fees). The central government also may choose not to include all of the sector projects proposed by a line ministry if it is doubtful that certain projects will come to fruition or in cases where additional projects contribute to exceeding sector-spending ceilings agreed with the IMF. 3. The large amount of donor aid that is “off-budget” hampers both the comprehensiveness and the transparency of the state budget. For 2003, the MPF (2004) estimates that, out of overall public spending, external funding represents 53%, of which 31% is off-budget; other sources indicate that over half of public spending is financed off-budget and about 80% of the investment budget is financed off-budget by donors. However, these are only rough estimates; the real extent of the problem remains unknown. 4. Own-revenue collection and expenditure also continue to impose significant bottlenecks for aggregate fiscal discipline and allocative efficiency in Mozambique. It is the case that donor funding represents the bulk of off-budget finance. Nonetheless, some government institutions are able to collect sizeable fees that are not accounted for (World Bank 2001a, Ministério do Plano e Finanzas, Direcção do Plano e Orçamento 1999) carried out a study that provides some information on the extent of the off-budget problem and sheds some light on the magnitude of the off-budget own-source revenues. More recently, it has been estimated that 13% of all off-budgets in the health sector are generated from user fees (Cabral et al 2005). 5. Addressing the off-budget problem: Recent initiatives including an MPF study in 2004 on the off-budget problem in the health sector; and the creation of an off-budget task force in 2005 which has led to a higher level of inclusion of central projects and programmes including all the common funds in the 2006 state budget. However, the problem remains acute, particularly for provincial level funding and for the inclusion of projects, which do not require contributions from the internal capital budget of the GOM. The problem is also much less studied once execution of


(248)

the budget commences. Owing to ongoing reforms in the state financial management system there is also consideration of bringing more information into the budget, but undertaking a more gradual approach to transferring management of these funds to Ministry of Finance authorities. 6. The government has taken action to reduce illegal user fees and reporting of the charging of those fees. It has, for example, produced a report on the size of the government’s own-source revenues, and it has instructed line ministries to comply with the existing laws on own-source revenues (all revenues should be deposited in the central government accounts before they are spent). Yet, change will take time: line ministries are reluctant to transfer their funds to the centre because of their uncertainty that the funds can be accessed in a timely manner. Moreover, user fees are considered as essential to the line ministries, often going to cover salaries or other recurrent costs. 7. PGBS donors remain concerned about the on-off-budget issue and are committed to taking measures to improve the situation. One of their objectives (set out in their joint PAF) is to increase budget coverage. The initiatives described above should assist in both defining and tackling the problem, including the development of recommendations for incorporating funds on-budget in the short and medium term. Overall, officials in both line ministries and MPF think that it will be possible to incorporate the majority of off-budget sources, although there will remain cases where the opportunity costs for some projects are simply too high to bring them on-budget.


(249)

ANNEX 5: SUMMARY OF CAUSALITY FINDINGS 1. In the “Key to the Causality Map” (Figure 5.1), links between elements at the different levels have been “keyed”. The findings related to each link and PGBS effects on this link are recorded in Table 5.1 “Causality Map: Summary of Causality Findings” in an entry which refers to the “key” of the link on the map. Each entry in the table also indicates the chapters in which related findings are to be found (mainly in the “Principal Causality Chain” section of the chapters in Part B). 2. A few cross-cutting features affecting potentially all the causality chains have been “keyed” too, namely feedback loop and transaction costs. Corresponding entries in Table 5.1 present an overview of how these features have affected the causality chains and PGBS effects on these.

Gen

eral

Bud

get S

uppo

rt in

Moz

ambi

que

(250

)

Figu

re 5

.1: K

ey to

the

Cau

salit

y M

ap

D

dD

dD

dD

d

GO

VER

NM

ENT

REA

DIN

ESS

Pove

rty

(!)

DO

NO

R R

EAD

INES

S

1.5

Alig

nmen

t and

ha

rmon

isat

ion

2.6

Don

ors

mov

e to

war

ds a

lignm

ent a

nd

harm

onis

atio

n ar

ound

na

tiona

l goa

ls a

nd

syst

ems

3.8

Enha

nced

de

moc

ratic

ac

coun

tabi

lity

Cou

ntry

per

spec

tives

, ca

paci

ties,

prio

ritie

s

3.3

Part

ner

Gov

ernm

ent

enco

urag

ed a

nd

empo

wer

ed to

st

reng

then

pro

-po

or p

olic

ies

2.5

TA a

nd c

apac

ity

deve

lopm

ent

focu

sed

on k

ey

publ

ic p

olic

y an

d PE

is

sues

and

prio

ritie

s

4.5

Impr

oved

ad

min

istr

atio

n of

ju

stic

e an

d re

spec

t fo

r hum

an ri

ghts

, an

d pe

ople

's

conf

iden

ce in

go

vern

men

t

1.4

TA/c

apac

ity

build

ing

3.7

Stre

ngth

ened

in

tra-

gove

rnm

ent

ince

ntiv

es

4.3

Mor

e re

sour

ces

flow

ing

to s

ervi

ce

deliv

ery

agen

cies

5.2

Non

-inco

me

pove

rty

redu

ctio

n3.

2 Pa

rtne

r G

over

nmen

t en

cour

aged

and

em

pow

ered

to

stre

ngth

en P

FM

and

govt

sys

tem

s

(pol

itica

l?) G

over

nanc

e th

resh

old

2.4

Polic

y di

alog

ue/

co

nditi

onal

ity fo

cuse

d on

key

pub

lic p

olic

y an

d PE

issu

es a

nd p

riorit

ies

4.4

Appr

opria

te

sect

or p

olic

ies

addr

ess

mar

ket

failu

res

4.7

Mor

e an

d m

ore

resp

onsi

ve/

pro-

poor

ac

coun

tabl

e se

rvic

e de

liver

y

5.3

Empo

wer

men

t an

d so

cial

in

clus

ion

of p

oor

peop

leG

loba

l per

spec

tives

, ca

paci

ties,

prio

ritie

s1.

3 C

ondi

tiona

lity

3.1

Incr

ease

d re

sour

ces

for

serv

ice

deliv

ery

PFM

thre

shol

d2.

3 In

crea

se in

pr

edic

tabi

lity

of

exte

rnal

fund

s to

na

tiona

l bud

get

3.6

Incr

ease

d al

loca

tive

effic

ienc

y of

PFM

sys

tem

3.5

Incr

ease

d op

erat

iona

l effi

cien

cy

of P

FM s

yste

m

4.2

Appr

opria

te

priv

ate

sect

or

regu

lato

ry p

olic

ies

4.6

Mor

e co

nduc

ive

grow

th-

enha

ncin

g en

viro

nmen

t

5.1

Inco

me

pove

rty

redu

ctio

n

Con

cern

and

cap

acity

to

redu

ce p

over

ty

Com

posi

tion

and

bala

nce

of

inpu

ts re

leva

nt

to G

over

nmen

t an

d IP

co

ncer

ns in

co

untr

y co

ntex

t

2.2

Incr

ease

in

prop

ortio

n of

fund

s su

bjec

t to

natio

nal

budg

et

PRSP

Mac

ro m

anag

emen

t qu

ality

1.2

Polic

y di

alog

ue

2.1

Mor

e ex

tern

al

reso

urce

s fo

r G

over

nmen

t bu

dget

3.4

Impr

oved

fis

cal d

isci

plin

e4.

1 M

acro

en

viro

nmen

t fa

vour

able

to

priv

ate

inve

stm

ent

and

grow

th

1.1

PGB

S fu

ndin

g

(Imm

edia

te e

ffect

s/

activ

ities

)(O

utpu

ts)

(Ent

ry

cond

ition

s)(In

puts

)

Leve

l Fou

r Le

vel F

ive

(Out

com

es)

(Impa

cts)

Leve

l Tw

o Le

vel T

hree

Le

vel Z

ero

Leve

l One

A

C

D

D E

F GF F

P

I

L

MR S

T

Y

Bb

B

X

Cc

Cc

Cc

Cc

Q

Z Aa

X

Dd

Dd

Dd

JK

CO

Y

VU

W

N

V

W

H

N

Ann

ex 5

: Sum

mar

y of

Cau

salit

y Fi

ndin

gs

(251

)

Tabl

e 5.

1: C

ausa

lity

Map

– S

umm

ary

of C

ausa

lity

Find

ings

in M

ozam

biqu

e

A

Leve

l 0 →

Lev

el 1

The

des

ign

and

its re

leva

nce

Rel

evan

t des

ign,

whi

ch h

as e

volv

ed p

artic

ular

ly in

resp

onse

to g

over

nmen

t dem

ands

for g

reat

er p

redi

ctab

ility

of I

P co

mm

itmen

t. D

esig

n in

clud

ed a

ll pro

gram

me

aid

and,

whi

le th

e he

art i

s P

GBS

, dia

logu

e ha

s in

crea

sing

ly b

ecom

e in

clus

ive,

par

ticul

arly

of s

ecto

r sup

port.

Initi

al a

naly

sis

reco

gnis

ed w

eakn

ess

of g

over

nmen

t ca

paci

ty a

nd a

ccou

ntab

ility

but

did

not

dev

elop

ade

quat

e as

soci

ated

sup

port

parti

cula

rly o

n ca

paci

ty. [

Cha

pter

B1]

B

Le

vel 1

→ L

evel

2 O

verv

iew

of i

nput

s to

imm

edia

te e

ffect

s Si

gnifi

cant

effe

cts

from

all

inpu

ts e

xcep

t tha

t the

re h

as n

ot b

een

a di

stin

ct P

GB

S ap

proa

ch to

Tec

hnic

al A

ssis

tanc

e/C

apac

ity b

uild

ing

(TA/

CB)

. The

re a

re

asso

ciat

ed T

A/C

B pr

ojec

ts g

iven

on

a fra

gmen

ted

proj

ect b

asis

to v

ario

us d

irect

orat

es o

f the

Min

istry

of P

lann

ing

and

Fina

nce.

A p

ool t

o su

ppor

t the

tech

nica

l re

form

uni

t of P

FM s

yste

ms

(UTR

AFE)

repr

esen

ts th

e m

ost s

izea

ble

pool

ing

mec

hani

sm fo

r TA/

CB

to s

treng

then

PFM

acr

oss

gove

rnm

ent.

But o

vera

ll sup

port

for

TA/C

B la

cks

the

com

preh

ensi

vene

ss a

ppro

pria

te to

PG

BS.

C

1.1 →

2.1

/2.2

PG

BS

effe

ct o

n to

tal e

xter

nal r

esou

rces

for b

udge

t and

the

prop

ortio

n of

fund

s su

bjec

t to

the

natio

nal b

udge

t PG

BS

has

beco

me

a si

zeab

le s

hare

of O

DA

and

has

con

tribu

ted

sign

ifica

nt fu

ndin

g to

the

GO

M b

udge

t, bu

t ove

rall

OD

A ha

s no

t inc

reas

ed a

nd is

falli

ng in

real

te

rms.

[Cha

pter

s A3

, B1,

B3]

D

1.

2/1.

3 →

2.3

Effe

cts

of d

ialo

gue

and

cond

ition

ality

on

pred

icta

bilit

y of

ext

erna

l fun

ding

to th

e bu

dget

In

itial

ly P

GBS

dis

burs

emen

t suf

fere

d fro

m lo

w p

redi

ctab

ility

(con

tribu

ting

to th

e G

OM

app

eal w

hich

led

to th

e de

velo

pmen

t of a

mor

e co

ncre

te M

OU

). D

ialo

gue

and

mec

hani

sms

for a

ccou

ntab

ility

of d

onor

s on

thei

r ow

n pe

rform

ance

, in

conj

unct

ion

with

MO

U, h

ave

led

to m

uch

impr

oved

leve

ls o

f pre

dict

abilit

y. [C

hapt

er B

1]

E 1.

2 →

2.4

Inc

reas

ed fo

cus

of d

ialo

gue

on k

ey p

ublic

pol

icy

and

expe

nditu

re is

sues

PG

BS

dial

ogue

was

alw

ays

focu

sed

on p

ublic

exp

endi

ture

issu

es, p

artic

ular

ly in

the

cont

ext o

f pro

-poo

r allo

catio

ns, b

ut s

ince

200

3 it

is m

ore

stro

ngly

focu

sed

on

asse

ssin

g th

e im

pact

of e

xpen

ditu

re. D

ialo

gue

(Joi

nt R

evie

w a

nd w

orki

ng g

roup

s) a

nd P

AF e

valu

atio

n ha

ve s

uppo

rted

sect

oral

and

cro

ss-s

ecto

ral p

ro-p

oor

prio

ritie

s. H

ither

to re

lativ

ely

negl

ecte

d se

ctor

s (p

rivat

e se

ctor

dev

elop

men

t, le

gal a

nd ju

dici

al re

form

) are

rece

ivin

g m

ore

atte

ntio

n. [C

hapt

ers

B1,

B2]

F

1.3 →

2.3

/2.4

/2.5

Inf

luen

ce o

f con

ditio

nalit

y on

pre

dict

abili

ty o

f fun

ding

, on

focu

s of

dia

logu

e, a

nd o

n TA

/CB

Im

plic

it po

litic

al c

ondi

tions

initi

ally

cre

ated

unc

erta

inty

. The

200

4 M

OU

spe

lt ou

t the

fund

amen

tal p

rinci

ples

of t

he re

latio

nshi

p, a

nd th

e pe

rform

ance

exp

ecta

tions

on

bot

h go

vern

men

t and

IPs.

The

se h

ave

grea

tly im

prov

ed p

redi

ctab

ility

and

cla

rifie

d th

e fo

cus

of d

ialo

gue.

Ann

ual J

oint

Rev

iew

s an

d pe

rform

ance

ass

essm

ent

clar

ify e

xpec

tatio

ns o

n go

vern

men

t. TA

/CB

are

subj

ects

of d

ialo

gue

but (

exce

pt fo

r the

impl

emen

tatio

n of

SIS

TAFE

) not

of c

ondi

tiona

lity.

[Cha

pter

s A3

, B1,

B3,

B4

, B5]

G

1.

4 →

2.5

PG

BS

imm

edia

te (d

irect

) effe

ct o

n TA

/CB

Ther

e ha

s no

t bee

n a

dist

inct

PG

BS a

ppro

ach

to T

A/C

B. T

here

are

ass

ocia

ted

TA/C

B pr

ojec

ts g

iven

on

a fra

gmen

ted

proj

ect b

asis

to th

e M

inis

try o

f Pla

nnin

g an

d Fi

nanc

e an

d, g

iven

on

a po

oled

bas

is (

led

by IM

F w

ith b

ilate

ral s

uppo

rt), f

or th

e de

velo

pmen

t of a

n In

tegr

ated

Fin

anci

al M

anag

emen

t Inf

orm

atio

n S

yste

m

(SIS

TAFE

) to

stre

ngth

en P

FM a

cros

s go

vern

men

t. Bu

t sup

port

for T

A/C

B la

cks

the

com

preh

ensi

vene

ss a

ppro

pria

te to

PG

BS. [

Cha

pter

s B1

, B4,

C3]

Gen

eral

Bud

get S

uppo

rt in

Moz

ambi

que

(252

)

H

1.5 →

2.4

/2.5

/2.6

Mov

es to

war

ds h

arm

onis

atio

n an

d al

ignm

ent w

ith n

atio

nal g

oals

and

sys

tem

s, re

flect

ed in

dia

logu

e an

d TA

/CB

wor

k St

rong

H&

A ef

fect

s, in

clud

ing

thro

ugh

dem

onst

ratio

n ef

fect

s on

oth

er a

id m

odal

ities

(e.g

. wid

e us

e of

PAF

and

the

incr

easi

ng a

lignm

ent o

f sec

tor p

rogr

amm

es

with

the

budg

et c

ycle

). H

arm

onis

atio

n be

twee

n PG

BS

dono

rs m

ainl

y ta

kes

plac

e th

roug

h th

eir a

lignm

ent w

ith G

OM

sys

tem

s. T

he fl

aw is

in th

e (in

)ade

quac

y of

th

e bu

dget

ary

syst

ems

and

perh

aps

the

cohe

renc

e/ow

ners

hip

of n

atio

nal p

olic

y on

whi

ch d

onor

s ar

e al

igni

ng. H

&A o

f TA/

CB

has

exte

nded

som

ewha

t: se

vera

l do

nors

pro

vide

TA/

CB

to th

e sa

me

dire

ctor

ates

and

als

o op

erat

e a

pool

to s

uppo

rt SI

STAF

E w

hich

unt

il now

focu

ses

prin

cipa

lly o

n bu

dget

ary

acco

untin

g ra

ther

th

an p

lann

ing.

[Cha

pter

s B

2, B

4, B

10]

I 2.

1/2.

2/2.

3 →

3.1

Incr

ease

d re

sour

ces

for s

ervi

ce d

eliv

ery

(flow

-of-f

unds

effe

cts)

M

ore

reso

urce

s ha

ve b

een

brou

ght f

ully

on-

budg

et th

roug

h PG

BS

fund

s th

emse

lves

and

als

o by

the

grow

ing

focu

s of

PG

BS d

onor

s on

redu

cing

the

volu

me

of o

ff-bu

dget

flow

s m

ore

gene

rally

. PG

BS

fund

s ar

e av

aila

ble

for G

OM

’s d

iscr

etio

nary

use

to fu

lfil it

s PR

SP c

omm

itmen

ts. T

he P

AF a

nnua

lly m

akes

thes

e co

mm

itmen

ts

mor

e co

ncre

te a

nd fo

cuse

d. P

GBS

fund

ing

has

also

incr

ease

d av

aila

bilit

y of

fund

s fo

r rec

urre

nt e

xpen

ditu

re. H

owev

er, i

t is

prob

ably

true

that

the

sam

e fu

ndin

g al

so u

sed

to g

o to

ser

vice

del

iver

y bu

t thr

ough

oth

er a

id m

odal

ities

. Lin

e m

inis

tries

are

con

cern

ed a

t the

thre

at to

thei

r dire

ct li

nes

of d

onor

fina

nce

for s

ecto

r pr

iorit

ies.

[Cha

pter

B3]

J

2.4/

2.5/

2.6 →

3.1

Inc

reas

ed re

sour

ces

for s

ervi

ce d

eliv

ery

(dia

logu

e/TA

/H&

A e

ffect

s)

GO

M e

xpen

ditu

re p

refe

renc

es (f

avou

ring

“prio

rity

sect

ors”

, mai

nly

educ

atio

n an

d he

alth

) wer

e es

tabl

ishe

d in

the

PRSP

, con

curr

ently

with

PG

BS a

nd w

ith s

trong

in

fluen

ce o

f PG

BS

IPs.

PG

BS d

ialo

gue

and

cond

ition

ality

hav

e m

aint

aine

d P

PE

com

mitm

ents

, and

mad

e di

sbur

sem

ent c

ondi

tiona

l on

it. [C

hapt

er B

3]

K

2.1/

2.2/

2.3 →

3.2

Flo

w-o

f-fun

ds e

ffect

s on

em

pow

erm

ent t

o st

reng

then

PFM

etc

. sys

tem

s

By

putti

ng m

ore

fund

s on

-bud

get,

PGBS

has

hel

ped

to c

reat

e co

nditi

ons

for t

he s

treng

then

ing

of P

FM, b

ut p

rogr

ess

is m

odes

t and

from

a w

eak

base

. As

a co

nseq

uenc

e of

incr

ease

d bu

dget

fund

ing,

MPF

and

line

min

istri

es a

re b

egin

ning

to p

lan

budg

et p

riorit

ies

mor

e ef

fect

ivel

y an

d to

stre

ngth

en b

udge

t acc

ount

ing.

H

owev

er, c

ontin

ued

pred

omin

ance

of d

onor

fund

ing

thro

ugh

othe

r aid

mod

aliti

es w

eake

ns th

is e

ffect

. [C

hapt

ers

B3, B

4]

L 2.

4/2.

5/2.

6 →

3.2

Dia

logu

e/TA

/ H&

A e

ffect

s on

em

pow

erm

ent t

o st

reng

then

PFM

etc

. D

ialo

gue,

sha

red

cond

ition

s an

d jo

int p

erfo

rman

ce a

sses

smen

t, w

ithin

the

fram

ewor

k of

stro

ng h

arm

onis

atio

n an

d al

ignm

ent,

have

gre

atly

stre

ngth

ened

the

pres

sure

on

gove

rnm

ent t

o im

prov

e PF

M. T

his

is b

acke

d by

the

SIST

AFE

refo

rms

in b

udge

tary

acc

ount

ing.

How

ever

, TA/

CB

in th

e M

PF a

nd c

over

ing

PFM

ge

nera

lly a

re fr

agm

ente

d be

twee

n m

ultip

le d

onor

s. [C

hapt

ers

B2, B

3, B

4]

M

2.4 →

3.3

Dia

logu

e en

cour

ages

and

em

pow

ers

stre

ngth

enin

g of

pro

-poo

r pol

icie

s Th

e co

mm

itmen

t to

pro-

poor

pol

icie

s ex

ists

inde

pend

ently

of,

but s

uppo

rted

by, P

GBS

. Dia

logu

e in

the

PGBS

Joi

nt R

evie

w p

roce

ss a

nd a

sses

smen

t usi

ng P

AF

have

rein

forc

ed a

ttent

ion

to p

ro-p

oor o

utco

mes

, mad

e ta

rget

s m

ore

conc

rete

, mad

e th

e pr

o-po

or a

gend

a m

ore

cros

s-se

ctor

al, a

nd e

mbr

aced

sec

tors

whi

ch

hith

erto

had

less

don

or a

ttent

ion.

GO

M h

as b

een

enco

urag

ed to

com

mit

to s

uch

polic

ies.

[Cha

pter

B5]

N

3.

1 →

3.3

PG

BS

fund

ing

enco

urag

es a

nd e

mpo

wer

s st

reng

then

ing

of p

ro-p

oor p

olic

ies

The

effe

ctiv

enes

s of

the

PGBS

dia

logu

e th

roug

h th

e Jo

int R

evie

w p

roce

ss (s

ee M

) dep

ends

on

the

exis

tenc

e of

PG

BS fu

ndin

g. A

lthou

gh o

vera

ll fun

ding

leve

ls fo

r se

rvic

es h

ave

prob

ably

not

incr

ease

d as

a re

sult

of P

GB

S, th

e le

vel o

f fun

ds c

hann

elle

d th

roug

h th

e st

ate

budg

et h

as in

crea

sed

beca

use

of P

GBS

. Cha

nnel

ling

of

fund

s th

roug

h th

e st

ate

budg

et s

uppo

rts c

ross

-sec

tora

l dia

logu

e, g

ives

sup

port

to c

ross

-gov

ernm

enta

l pol

icy

prio

ritie

s as

exp

ress

ed in

the

PRSP

, and

giv

es s

ome

supp

ort t

o se

ctor

s (e

.g. t

he ju

dici

ary)

whi

ch p

revi

ousl

y re

ceiv

ed li

mite

d do

nor a

ttent

ion.

[Cha

pter

s B3

, B5]

Ann

ex 5

: Sum

mar

y of

Cau

salit

y Fi

ndin

gs

(253

)

O

2.4/

2.5/

2.6 →

3.4

N

on-fl

ow-o

f-fun

ds e

ffect

s on

fisc

al d

isci

plin

e IM

F po

licy

is th

e st

rong

est e

xter

nal in

fluen

ce o

n bo

th G

OM

mon

etar

y an

d fis

cal p

olic

y. H

owev

er, P

GB

S di

alog

ue a

nd c

ondi

tiona

lity,

linke

d to

PR

GF,

hav

e cr

eate

d pr

essu

re to

sus

tain

fisc

al d

isci

plin

e. F

isca

l dis

cipl

ine

was

not

adh

ered

to d

urin

g ea

rly th

e ye

ars

of P

GB

S ow

ing

to b

ank

reca

pita

lisat

ion

and

outla

ys fo

r pos

t-flo

od

reco

nstru

ctio

n. L

ow le

vels

of t

ax c

olle

ctio

n in

200

4 ha

ve a

lso

cont

ribut

ed to

targ

ets

not b

eing

met

. How

ever

, the

gen

eral

tren

d is

pos

itive

. [C

hapt

er B

6]

P 2.

1/2.

2/2.

3 →

3.4

F

low

-of-f

unds

effe

cts

on fi

scal

dis

cipl

ine

Dis

cipl

ine

is p

roba

bly

influ

ence

d by

hav

ing

mor

e fu

nds

on-b

udge

t, lim

iting

the

nee

d to

bor

row

and

red

ucin

g th

e de

ficit

afte

r gr

ants

for

the

sam

e le

vel o

f ex

pend

iture

. How

ever

, lat

e di

sbur

sem

ents

hav

e ha

d ne

gativ

e ef

fect

s on

bud

get d

isci

plin

e w

hen

the

gove

rnm

ent h

as re

sorte

d to

issu

ing

treas

ury

bills

to c

over

liq

uidi

ty g

aps.

Fis

cal d

isci

plin

e is

fully

dep

ende

nt o

n go

vern

men

t beh

avio

ur, a

nd fl

ow-o

f-fun

ds e

ffect

s, re

gard

less

of t

heir

size

, can

not c

ontro

l but

onl

y in

fluen

ce

this

dyn

amic

. [C

hapt

er B

6]

Q

3.2 →

3.5

/3.6

PFM

em

pow

erm

ent o

f gov

ernm

ent →

impr

oved

allo

cativ

e an

d op

erat

iona

l effi

cien

cy

Allo

cativ

e pr

iorit

ies

are

clea

r in

the

com

bine

d ef

fect

s of

PR

SP,

stre

ngth

ened

and

mad

e m

ore

spec

ific

by P

GBS

/PAF

targ

ets,

and

exp

ress

ed a

lso

in s

ecto

r pla

ns.

Con

fiden

ce in

the

mat

ch b

etw

een

budg

etar

y pr

iorit

ies

and

actu

al e

xpen

ditu

re h

as b

een

wea

k, th

ough

this

is n

ow b

eing

add

ress

ed b

y SI

STAF

E. O

pera

tiona

l ef

ficie

ncy

is s

till w

eak

but t

he re

curr

ent/c

apita

l bal

ance

is im

prov

ing

and

sala

ries

are

incr

easi

ngly

bei

ng p

aid

on ti

me.

[Cha

pter

s B

3, B

4]

R

3.2 →

3.7

Gov

ernm

ent e

mpo

wer

men

t to

stre

ngth

en s

yste

ms →

stro

nger

intra

-gov

ernm

ent i

ncen

tives

PG

BS

dial

ogue

and

on-

budg

et fi

nanc

ing

is s

treng

then

ing

line

min

istry

ince

ntiv

es to

ope

rate

thro

ugh

natio

nal p

lann

ing

and

budg

et c

hann

els,

but

sec

tor a

id fo

r key

m

inis

tries

and

dire

ct p

rovi

ncia

l leve

l fun

ding

rem

ain

mor

e im

porta

nt to

them

. Dis

trict

bud

gets

stil

l dep

end

mai

nly

on th

eir r

elat

ion

with

line

min

istri

es. [

Cha

pter

B4]

S

(2.2

→) 3

.2 →

3.8

Gov

ernm

ent e

mpo

wer

men

t to

stre

ngth

en s

yste

ms →

enh

ance

d de

moc

ratic

acc

ount

abili

ty

PGB

S fu

nds

are

fully

on-

budg

et, a

nd to

geth

er w

ith n

ew in

stru

men

ts fo

r per

form

ance

ass

essm

ent a

nd re

porti

ng o

n bu

dget

exe

cutio

n, h

ave

incr

ease

d op

portu

nitie

s fo

r dem

ocra

tic a

ccou

ntab

ility

, aud

it, a

nd p

ublic

info

rmat

ion.

Aud

it sy

stem

s ar

e st

reng

then

ing

with

PG

BS s

uppo

rt an

d pr

essu

re, b

ut s

yste

ms

of p

arlia

men

tary

and

pu

blic

acc

ount

abili

ty re

mai

n w

eak.

[Cha

pter

B4]

T

3.4 →

4.1

Lin

k fro

m fi

scal

dis

cipl

ine

to g

row

th-e

nhan

cing

mac

ro e

nviro

nmen

t. A

mor

e fa

vour

able

mac

roec

onom

ic e

nviro

nmen

t – e

xcep

t for

hig

h in

tere

st ra

tes

– ha

s la

rgel

y be

en a

chie

ved

unde

r the

gui

danc

e of

IMF

guid

ed m

onet

aris

t pol

icie

s su

ppor

ted

by P

GB

S w

hich

is lin

ked

to th

e PR

GF.

PG

BS

has

hel

ped

redu

ce th

e co

st o

f fin

anci

ng th

e bu

dget

and

hen

ce th

e te

nden

cy fo

r GO

M b

orro

win

g to

cro

wd

out p

rivat

e in

vest

men

t. [C

hapt

er B

6]

U

3.3/

3.5/

3.6 →

4.2

Bet

ter P

FM s

yste

m a

nd g

over

nmen

t em

pow

ered

to s

treng

then

pol

icie

s →

app

ropr

iate

priv

ate

sect

or re

gula

tory

pol

icie

s Th

ere

has

been

littl

e ev

iden

ce, u

ntil

very

rece

ntly

, of a

n im

prov

emen

t of t

he re

gula

tory

env

ironm

ent o

r tha

t ref

orm

s of

the

PFM

sys

tem

hav

e co

ntrib

uted

to th

is.

How

ever

, PG

BS

has

prov

ided

a fo

rum

for d

ialo

gue

abou

t thi

s is

sue

with

a d

onor

–gov

ernm

ent t

hem

atic

gro

up o

n pr

ivat

e se

ctor

dev

elop

men

t tha

t has

con

side

red,

am

ong

othe

r mat

ters

, the

effe

ct o

f gov

ernm

ent’s

fina

ncia

l man

agem

ent.

[Cha

pter

s B5

, C2]

V

3.1/

3.5/

3.6 →

4.3

Inc

reas

ed re

sour

ces

for s

ervi

ce d

eliv

ery

and

bette

r PFM

→ m

ore

reso

urce

s flo

win

g to

ser

vice

del

iver

y ag

enci

es

Allo

catio

ns to

ser

vice

del

iver

y ag

enci

es h

ave

incr

ease

d si

nce

1995

. Pol

icy c

omm

itmen

t by

gove

rnm

ent a

nd d

onor

s to

incr

easi

ng re

sour

ce fl

ows

to s

ervi

ce d

eliv

ery

pre-

date

PG

BS,

but

PG

BS

has

mai

ntai

ned

the

com

mitm

ent a

nd m

ade

it m

ore

conc

rete

by

esta

blis

hing

mor

e de

taile

d ta

rget

s fo

r prio

ritis

ing

pro-

poor

ser

vice

s th

roug

h th

e P

AF. T

he a

lloca

tion

of in

crea

sed

fund

s th

roug

h th

e bu

dget

and

impr

ovin

g PF

M s

yste

ms

enab

le b

ette

r mon

itorin

g of

bud

get e

xecu

tion

acco

rdin

g to

po

licy

prio

ritie

s, a

nd a

mor

e ba

lanc

ed a

lloca

tion

betw

een

recu

rren

t and

inve

stm

ent e

xpen

ditu

re. [

Cha

pter

s B

5, B

7].

Gen

eral

Bud

get S

uppo

rt in

Moz

ambi

que

(254

)

W

3.3/

3.5/

3.6 →

4.4

Bet

ter P

FM s

yste

m a

nd g

over

nmen

t em

pow

ered

to s

treng

then

pol

icie

s →

app

ropr

iate

sec

tor p

olic

ies

addr

ess

mar

ket f

ailu

res

PGB

S ha

s en

gage

d di

rect

ly w

ith th

e qu

estio

n of

priv

ate

sect

or d

evel

opm

ent o

nly

sinc

e th

e br

oade

ning

of i

ts a

gend

a an

d th

e de

velo

pmen

t of t

he P

erfo

rman

ce

Asse

ssm

ent F

ram

ewor

k in

200

3/04

. It h

as fo

llow

ed th

e pr

iorit

y or

ient

atio

n of

the

PRSP

to p

ublic

sec

tor e

xpen

ditu

re. H

owev

er, m

ore

rece

ntly

, und

er p

ress

ure

of

the

PGB

S di

alog

ue, d

onor

s an

d go

vern

men

t are

now

giv

ing

mor

e at

tent

ion

to p

rivat

e se

ctor

dev

elop

men

t and

to le

gal a

nd re

gula

tory

con

stra

ints

on

it. [C

hapt

ers

B5, B

6, C

2 an

d D

2]

X 3.

7/3.

8 →

4.5

Gov

ernm

ent i

ncen

tives

/dem

ocra

tic a

ccou

ntab

ility

→ p

eopl

e's

conf

iden

ce in

gov

ernm

ent,

adm

inis

tratio

n of

just

ice

and

hum

an ri

ghts

W

hile

ther

e ha

s be

en s

ome

adju

stm

ent t

o in

tra-g

over

nmen

tal in

cent

ives

(R) a

nd th

e po

tent

ial f

or g

reat

er d

omes

tic a

ccou

ntab

ility

(S),

thes

e ch

ange

s ha

ve s

o fa

r ha

d lit

tle d

isce

rnib

le e

ffect

on

the

adm

inis

tratio

n of

hum

an ri

ghts

, jus

tice

or p

eopl

e's

conf

iden

ce in

gov

ernm

ent.

[Cha

pter

B8]

Y

4.1/

4.2 →

4.6

Inf

luen

ce o

f mac

ro e

nviro

nmen

t and

priv

ate

sect

or p

olic

ies

on e

nviro

nmen

t for

gro

wth

Th

e ef

fect

s ar

e w

eak.

How

ever

, PG

BS

has

cont

ribut

ed to

a m

ore

favo

urab

le m

acro

econ

omic

env

ironm

ent a

nd, m

ore

rece

ntly

, PG

BS

dial

ogue

has

giv

en s

ome

atte

ntio

n to

priv

ate

sect

or d

evel

opm

ent.

[Cha

pter

s B

5, C

2]

Z 4.

3 →

4.7

Mor

e re

sour

ces

reac

h se

rvic

e de

liver

y ag

enci

es →

mor

e an

d m

ore

resp

onsi

ve p

ro-p

oor s

ervi

ce d

eliv

ery

Mor

e re

sour

ces

are

reac

hing

ser

vice

del

iver

y ag

enci

es b

ut th

is is

stil

l due

mor

e to

sec

tor t

han

gene

ral b

udge

t sup

port.

In th

e sh

ort t

erm

, lin

e m

inis

tries

are

co

ncer

ned

abou

t the

inte

rrup

tion

of th

e flo

w o

f fun

ds b

y th

eir t

rans

fer t

o th

e bu

dget

. The

qua

ntity

of s

ervi

ces

has

incr

ease

d; th

eir q

ualit

y an

d re

spon

sive

ness

is

doub

tful.

[Cha

pter

s B3

, B7]

A

a 4.

4 →

4.7

Inf

luen

ce o

f sec

tor p

olic

ies

on p

ro-p

oor s

ervi

ce d

eliv

ery

The

cove

rage

of s

ocia

l ser

vice

s (e

duca

tion

and

heal

th)

has

incr

ease

d gr

eatly

ove

r th

e la

st 1

0 ye

ars.

Sec

tor

supp

ort a

nd p

roje

ct a

id h

ave

been

the

mai

n co

ntrib

utin

g ai

d m

odal

ities

. How

ever

, PG

BS

has

mai

ntai

ned

supp

ort f

or G

OM

's c

omm

itmen

t to

thes

e se

ctor

s, h

as a

dded

col

lect

ive

dono

r sup

port

and

pres

sure

to

the

achi

evem

ent o

f mea

sura

ble

targ

ets,

and

has

hel

ped

build

the

syst

ems

that

will

impr

ove

spen

ding

effi

cien

cy a

nd im

prov

e th

e qu

ality

of s

ervi

ce fu

ndin

g in

the

futu

re. [

Cha

pter

s B

5, B

7]

Bb

Leve

l 4 →

Lev

el 5

PG

BS

out

com

es →

pov

erty

impa

cts

PGB

S m

ay h

ave

had

a sm

all p

ositi

ve e

ffect

on

serv

ice

use,

inco

me-

pove

rty re

duct

ion

and

the

empo

wer

men

t of p

oor p

eopl

e. H

owev

er, i

ts m

ediu

m-te

rm e

ffect

s ca

n be

exp

ecte

d to

be

grea

ter,

give

n th

at it

sup

ports

und

erly

ing

posi

tive

proc

esse

s (s

ervi

ce p

riorit

isat

ion

and

targ

etin

g, s

usta

ined

gov

ernm

ent f

inan

cing

, st

reng

then

ed P

FM s

yste

ms,

and

sup

port

for a

ccou

ntab

ility

and

judi

cial

refo

rm).

[Cha

pter

s B8

] C

c (a

ll le

vels

) Tra

nsac

tion

cost

s In

the

trans

ition

to P

GB

S, tr

ansa

ctio

n co

sts

for G

OM

and

per

haps

IPs

are

likel

y to

hav

e in

crea

sed,

esp

ecia

lly a

s ot

her a

id m

odal

ities

con

tinue

. Up-

front

tran

sact

ion

cost

s ha

ve s

prea

d fro

m li

ne m

inis

tries

to M

PF, r

athe

r tha

n sh

iftin

g fro

m o

ne to

the

othe

r. H

owev

er, P

GB

S ce

rtain

ly p

rese

nts

low

er tr

ansa

ctio

n co

sts

for G

OM

at

the

disb

urse

men

t sta

ge. [

Cha

pter

s B3

, C4]

D

d (a

ll le

vels

) Fe

edba

ck

Very

stro

ng m

echa

nism

s fo

r fee

dbac

k an

d sh

ared

lear

ning

exi

st, p

artic

ular

ly in

rela

tions

bet

wee

n G

OM

and

IPs

thro

ugh

the

Join

t Rev

iew

. Mec

hani

sms

have

als

o be

en s

et u

p to

incl

ude

civi

l soc

iety

, and

par

liam

ent h

as a

cces

s to

don

or/g

over

nmen

t ass

essm

ents

– b

ut th

ese

rem

ain

wea

kly

deve

lope

d or

wea

kly

expl

oite

d by

st

akeh

olde

rs. A

t the

offi

cial

leve

l, m

ore

atte

ntio

n co

uld

be g

iven

to (i

) ass

essi

ng p

over

ty im

pact

s (c

urre

ntly

relia

nt o

n go

vern

men

t rep

ortin

g) a

nd (i

i) sy

stem

atic

ally

co

nsid

erin

g th

e de

sira

ble

bala

nce

betw

een

PGB

S an

d ot

her a

id m

odal

ities

. [C

hapt

ers

B9 a

nd D

2]


(255)

ANNEX 6: SURVEY OF SEVEN CIVIL SOCIETY ORGANISATIONS

Introduction The following questionnaire was sent out to provincial branches of the Grupo Moçambicano da Dívida, a national NGO which is an important member of the Poverty Observatory (see Chapter B5). The survey asked for comments on the trends in service delivery and what explained these; the intention was to find whether the causal factors identified had anything to do with the sorts of intervention associated with PGBS. Responses were obtained from seven civil society groups from four provinces (two in the south, two in the centre, and three in one northern province). The tabulated results are overleaf.

Box 6.1: The Questionnaire 1. Does your organisation (or any other that you share information with) monitor the performance of government services? Does it do this systematically? How?

2. Is there any evidence that finance is getting to the provincial and district levels better or worse than two years ago? For example

1. Are teachers and doctors/nurses more or less likely to be paid on time?

2. Are school buildings, clinics and hospitals being better or worse maintained? 3. If there have been improvements, please describe what factors have led to these

improvements

• Do you think that anything that the national government has done has helped? What?

3. Is your general impression that public services are improving, remaining the same or getting worse, particularly in regard to education, health care, and justice? For example, please comment on:

a. Education

• Primary and secondary school enrolment: Are they increasing? Are girls becoming more equally represented?

• Primary and secondary completion rates: Are they increasing? Are girls becoming more equally successful?

• If there have been improvements, please describe what factors have led to these improvements

• Do you think that anything that the national government has done has helped? What?

b. Health care

• Is it becoming easier to gain access to clinics and hospitals? • Is the service improving? • Are maternal and infant health services becoming more easily

accessible? • If there have been improvements, please describe what factors have led

to these improvements • Do you think that anything that the national government has done has

helped? What?

Gen

eral

Bud

get S

uppo

rt in

Moz

ambi

que

(256

)

Box

6.2

: The

Que

stio

nnai

re R

esul

ts

SIN

TIC

IM,

Inha

mba

ne

ADC

R, G

aza

GM

D Z

ambé

zia

OTM

.CS

Zam

bézi

a C

atho

lic C

hurc

h,

Cab

o D

elga

do

Uni

ons,

Cab

o D

elga

do

AEAT

UR

, Cab

o D

elga

do

Educ

atio

n

No

Mos

tly

Yes

in la

st tw

o ye

ars

Yes

Fr

om 2

005

Yes

Sala

ries

rece

ived

H

ealth

No

Mos

tly

Yes

Y

es

From

200

5 Y

es

Educ

atio

n

Poo

r Y

es

Yes

Y

es

Onl

y by

NG

Os

Som

e

M

aint

enan

ce

Hea

lth

P

oor

S

ome

Yes

O

nly

in D

istri

ct

HQ

s S

ome

Educ

atio

n Y

es

Yes

Y

es

Yes

Y

es

Yes

Y

es

Hea

lth

No

Yes

Y

es

Yes

Y

es

Yes

Serv

ice

Impr

oved

? Ju

stic

e N

o -

- -

No

No

No

All

Yes

Y

es

Yes

Y

es

Yes

Y

es

Yes

Num

bers

en

terin

g EP

1 in

crea

sed?

G

irls

Yes

Y

es

Yes

Y

es

Yes

Y

es

Yes

All

Yes

Y

es

Yes

Y

es

Yes

Y

es

Yes

Num

bers

co

mpl

etin

g EP

1 in

crea

sed?

G

irls

Yes

Y

es

Yes

Y

es

Yes

Y

es

Yes

All

Yes

Y

es

Yes

Y

es

Yes

Y

es

Yes

Num

bers

en

terin

g EP

2 in

crea

sed?

G

irls

No

Yes

Y

es

Yes

Y

es

Yes

Y

es

All

Yes

Y

es

Yes

Y

es

Yes

Y

es

Yes

Num

bers

co

mpl

etin

g EP

2 in

crea

sed?

G

irls

Yes

Y

es

Yes

Y

es

Yes

Y

es

Yes

Fa

ctor

s th

at le

d to

impr

ovem

ents

in

Edu

catio

n

Gov

ernm

ent P

lan

and

invo

lvem

ent o

f pa

rtner

s

Incr

ease

in n

umbe

r of

sch

ools

; cha

nge

in a

ttitu

de o

f pa

rent

s; a

bolit

ion

of s

choo

l m

atric

ulat

ion

and

book

pay

men

ts

Incr

ease

in n

umbe

r of

sch

ools

, tra

inin

g of

teac

hers

, IM

APS

sy

stem

. D

ebt c

ance

llatio

n,

HIP

C m

easu

res

Pub

lic d

ebat

es

betw

een

gove

rnm

ent a

nd

civi

l soc

iety

Abo

litio

n of

sch

ool

mat

ricul

atio

n pa

ymen

ts

New

sch

ool

cons

truct

ion

Pro

mot

ion

of g

irls'

ed

ucat

ion

G

over

nmen

t con

trib

utio

n in

Ed

ucat

ion

Con

stru

ctio

n of

sc

hool

s an

d pr

omot

ion

of g

irls'

ed

ucat

ion

N

ew in

vest

men

ts

Con

stru

ctio

n of

sc

hool

s

Con

stru

ctio

n of

IM

AP

, sec

onda

ry

scho

ols,

lang

uage

in

stitu

tes

and

UC

M

Ann

ex 6

: Sur

vey

of S

even

Civ

il S

ocie

ty O

rgan

isat

ions

(257

)

SIN

TIC

IM,

Inha

mba

ne

ADC

R, G

aza

GM

D Z

ambé

zia

OTM

.CS

Zam

bézi

a C

atho

lic C

hurc

h,

Cab

o D

elga

do

Uni

ons,

Cab

o D

elga

do

AEAT

UR

, Cab

o D

elga

do

H

ealth

acc

ess

impr

oved

?

Yes

-

Y

es

Yes

H

ealth

ser

vice

qua

lity

impr

oved

?

No

Yes

G

reat

ly

- Y

es

No

Yes

Fa

ctor

s th

at le

d to

impr

ovem

ents

in

Hea

lth

In

crea

se in

hea

lth

syst

em a

nd

train

ing

of h

ealth

st

aff

Incr

ease

in n

umbe

r of

hea

lth u

nits

, tra

inin

g of

hea

lth

staf

f. D

ebt

canc

ella

tion,

HIP

C

mea

sure

s

Pub

lic d

ebat

es

betw

een

gove

rnm

ent a

nd

civi

l soc

iety

Ambu

lanc

es a

nd

med

ical

sta

ff in

m

ost d

istri

cts

G

over

nmen

t con

trib

utio

n in

H

ealth

Im

prov

emen

t of

Hea

lth U

nits

In

vest

men

t in

heal

th s

yste

ms

Con

stru

ctio

n of

he

alth

uni

ts

Con

stru

ctio

n of

he

alth

uni

ts.

Con

trol a

nd

disc

iplin

e of

sta

ff

New

hea

lth u

nits

in

dist

ricts

; bet

ter

mea

ns o

f tra

nspo

rt

O

ther

com

men

ts

N

eed

for m

ore

civi

l so

ciet

y pa

rtici

patio

n in

po

verty

stra

tegy

Impo

rtanc

e of

su

ppor

t for

road

s,

fishe

ries,

hou

sing

, sa

nita

tion,

ene

rgy,

ge

nder

in

agric

ultu

re, s

uppo

rt fo

r sm

all f

arm

ers

and

tradi

ng

Mor

e lit

erac

y ce

ntre

s, e

spec

ially

fo

r wom

en; m

icro

-cr

edit

supp

ort f

or

smal

l ani

mal

pr

oduc

tion

Mor

e lit

erac

y ce

ntre

s, e

spec

ially

fo

r wom

en; m

icro

-cr

edit

supp

ort f

or

smal

l ani

mal

pr

oduc

tion

In

volv

emen

t in

serv

ice

mon

itorin

g

Yes

Y

es o

ccas

iona

lly

Mee

tings

with

pr

ovin

cial

di

rect

orat

es e

very

tw

o m

onth

s

Qua

rterly

mee

tings

ab

out r

epor

ts

Per

iodi

c m

eetin

gs

with

edu

catio

n di

rect

orat

e

Mee

tings

and

ne

gotia

tion

with

go

vern

men

t

Yes


(258)

Gen

eral

Bud

get S

uppo

rt in

Moz

ambi

que

(259

)

AN

NEX

7: P

ERFO

RM

AN

CE

ASS

ESSM

ENT

FRAM

EWO

RK

200

5 G

over

nmen

t Pro

gram

me

– PA

RPA

Pr

iorit

ies

PAF

2005

targ

ets

Stra

tegi

c O

bjec

tives

A

reas

Su

b-ar

eas

Obj

ectiv

es

Act

ions

In

dica

tors

N

o.

2005

20

06

2007

EP

1 ne

t enr

olm

ent r

ate

– to

tal

1a

79%

83

%

86%

EP

1 ne

t enr

olm

ent r

ate

– gi

rls

1b

77%

81

%

84%

EP

1 co

mpl

etio

n ra

te –

tota

l 2a

48

%

58%

66

%

Edu

catio

n P

rimar

y ed

ucat

ion

Uni

vers

al

educ

atio

n:

- inc

reas

e ac

cess

an

d re

tent

ion

- inc

reas

e qu

ality

of

edu

catio

n

- red

uce

gend

er

disp

ariti

es

App

rove

, im

plem

ent a

nd

asse

ss th

e st

rate

gic

plan

for

2005

-09

- Im

plem

ent t

he p

rogr

amm

e of

low

-cos

t sch

ool

cons

truct

ion

- I

mpl

emen

t the

stra

tegy

of

teac

hers

form

atio

n ta

king

in

to a

ccou

nt th

e ne

w

curri

culu

m

- App

rove

and

impl

emen

t the

ge

nder

stra

tegy

EP

1 co

mpl

etio

n ra

te –

girl

s 2b

41

%

52%

62

%

Mat

erna

l mor

talit

y re

duce

d In

crea

se o

ffer o

f obs

tetri

c ca

re

Pro

porti

on o

f ins

titut

iona

l de

liver

ies

amon

g ex

pect

ed

birth

s

3 49

%

51%

51

%

Mot

her a

nd

Chi

ld

Infa

nt m

orta

lity

redu

ced

Incr

ease

cov

erag

e of

the

Ext

ende

d V

acci

natio

n P

rogr

amm

e

T co

vera

ge <

1 ye

ar D

PT3

e H

B

4 95

%

95%

95

%

Hea

lth

In

crea

se a

cces

s to

ba

sic

heal

th

serv

ices

Spr

ead

acce

ss to

qua

lity

treat

men

t of t

rans

mitt

ed a

nd

non-

trans

mitt

ed d

isea

ses

Util

isat

ion

rate

– c

onsu

ltatio

ns

per i

nhab

itant

per

yea

r 5

0.93

0.

94

0.95

MIS

AU

/

C

NC

S

Red

uctio

n of

ver

tical

tra

nsm

issi

on

# H

IV+

preg

nant

wom

en a

nd

neon

ates

rece

ivin

g P

MTC

T P

roph

ylax

is

6 15

000

2500

0 35

000

Stre

ngth

en c

apac

ity a

nd

partn

ersh

ips

and

spre

ad

inst

itutio

nal s

uppo

rt to

the

prog

ram

mes

Per

cent

age

of fu

nds

chan

nelle

d by

CN

CS

-SE

to c

ivil

soci

ety

orga

nisa

tions

, pub

lic a

nd p

rivat

e (b

y ty

pe o

f org

anis

atio

n)

7 55

%

65%

70

%

Pov

erty

redu

ctio

n th

roug

h pr

ivile

ged

orie

ntat

ion

of p

ublic

se

rvic

es to

the

mos

t ne

edy

popu

latio

ns

HIV

/AID

S

CN

CS

Pre

vent

ion

and

miti

gatio

n of

the

impa

ct o

n pe

ople

in

fect

ed a

nd

affe

cted

by

HIV

/AID

S

Car

e an

d co

mm

unity

and

ho

me-

base

d su

ppor

t (o

rpha

ns a

nd v

ulne

rabl

e ch

ildre

n)

Per

cent

age

of c

omm

unity

in

itiat

ives

or C

BO

s su

ppor

ted

by

CN

CS

-SE

to s

uppo

rt or

phan

s an

d vu

lner

able

chi

ldre

n in

the

coun

try (

% o

f tot

al a

pplic

atio

ns

of C

SO

s an

d in

stitu

tions

from

pu

blic

and

priv

ate

sect

or)

8 20

%

23%

25

%

Reh

abili

tate

and

impr

ove

the

natio

nal n

etw

ork

Km

reha

bilit

ated

9

1091

70

5

Km

per

iodi

c m

aint

enan

ce

10

1635

20

01

Pov

erty

redu

ctio

n th

roug

h pr

ivile

ged

orie

ntat

ion

of p

ublic

se

rvic

es to

the

mos

t ne

edy

popu

latio

ns

Infra

stru

ctur

es

Roa

ds

Nat

iona

l net

wor

k im

prov

ed

Impr

ove

the

exec

utio

n of

w

orks

and

ser

vice

s K

m ro

utin

e m

aint

enan

ce

11

1434

3 15

247

Gen

eral

Bud

get S

uppo

rt in

Moz

ambi

que

(260

)

Gov

ernm

ent P

rogr

amm

e –

PAR

PA

Prio

ritie

s PA

F 20

05 ta

rget

s St

rate

gic

Obj

ectiv

es

Are

as

Sub-

area

s O

bjec

tives

A

ctio

ns

Indi

cato

rs

No.

20

05

2006

20

07

Wat

er

Acc

ess

incr

ease

d

Ope

n w

ell a

nd m

ake

new

co

nnec

tions

%

pop

ulat

ion

with

acc

ess

to

pota

ble

wat

er

12

44.2

0%

45.8

%

San

itatio

n

Acc

ess

incr

ease

d

Impr

oved

latri

nes,

sep

tic

tank

s %

pop

ulat

ion

with

acc

ess

to

sani

tatio

n se

rvic

es

13

37%

39

%

Incr

ease

cov

erag

e of

ag

ricul

tura

l out

reac

h se

rvic

es

% o

f far

mer

s as

sist

ed

expl

orat

ions

that

ado

pted

at

leas

t one

new

tech

niqu

e du

ring

the

last

12

mon

ths

14

28%

30

%

32%

Impr

ove

cove

rage

of a

nim

al

heal

th s

ervi

ces

% o

f cat

tle fa

rmer

s th

at

vacc

inat

ed th

eir l

ives

tock

15

70

%

72%

75

%

Stim

ulat

e m

arke

t m

echa

nism

s %

of c

erea

l pro

duct

ion

(mai

ze,

sorg

hum

and

rice

) co

mm

erci

alis

ed b

y th

e fo

rmal

se

ctor

16

16.1

0%

16.2

0%

16.6

0%

Agr

icul

tura

l S

ervi

ces

P

rom

otio

n of

ag

ricul

tura

l pr

oduc

tion

Pro

mot

e us

e of

irrig

atio

n te

chni

ques

A

rea

(Ha)

con

stru

cted

and

/or

reha

bilit

ated

with

pub

lic

reso

urce

s irr

igat

ion

sche

mes

17

2,90

0 3,

200

3,30

0

Acc

ess

to la

nd

Sim

plify

mec

hani

sms

of

obta

inin

g th

e rig

hts

for l

and

tenu

re

% o

f pro

cess

es re

ceiv

ed th

at

are

auth

oris

ed in

90

days

18

90

%

92%

95

%

Pro

mot

ion

of

econ

omic

de

velo

pmen

t, w

ith

prio

rity

to th

e ru

ral

area

s an

d re

duct

ion

of th

e re

gion

al

imba

lanc

es

Agr

icul

ture

and

R

ural

D

evel

opm

ent

Man

agem

ent

of N

atur

al

Res

ourc

es

Pro

mot

ion

of

sust

aina

ble

expl

orat

ion

of

natu

ral r

esou

rces

Pro

mot

e su

stai

nabl

e co

mm

erci

al m

anag

emen

t of

natu

ral r

esou

rces

% o

f con

cess

ions

with

ap

plic

atio

n pl

an a

ppro

ved

19

37%

45

%

50%

Am

endm

ent o

f the

Lab

our L

aw a

nd S

ubm

issi

on to

the

Ass

embl

y of

the

Rep

ublic

of t

he A

men

ded

Labo

ur L

aw

20

Law

sub

mitt

ed

Dev

elop

priv

ate

sect

ors

S

timul

ate

job

crea

tion

in th

e fo

rmal

sec

tor,

mod

erni

se

com

mer

cial

pr

actic

e to

impr

ove

econ

omic

ac

tiviti

es, s

impl

ify

the

proc

ess

of

busi

ness

re

gist

ratio

n an

d re

duce

cor

rupt

ion

Rev

isio

n of

the

com

mer

cial

cod

e 21

Im

plem

enta

tion

(sub

ject

to

parli

amen

tary

ap

prov

al)

Cre

atio

n of

a

favo

urab

le

envi

ronm

ent f

or

priv

ate

sect

or a

ctio

n

Mac

roec

onom

ic

and

finan

cial

po

licie

s

Fina

ncia

l sy

stem

S

treng

then

ac

coun

tabi

lity

in

the

bank

ing

sect

or

Con

duct

a fi

nanc

ial a

udit

of B

anco

Aus

tral c

omm

issi

oned

thro

ugh

PG

R

22

Fina

lised

M

easu

res

take

n

Ann

ex 7

: Per

form

ance

Ass

essm

ent F

ram

ewor

k

(261

)

Gov

ernm

ent P

rogr

amm

e –

PAR

PA

Prio

ritie

s PA

F 20

05 ta

rget

s St

rate

gic

Obj

ectiv

es

Are

as

Sub-

area

s O

bjec

tives

A

ctio

ns

Indi

cato

rs

No.

20

05

2006

20

07

Stre

ngth

en in

stitu

tiona

l cap

acity

of B

OM

and

oth

er re

gula

tory

au

thor

ities

23

A

ppro

val a

nd

issu

e of

LIC

SF

regu

latio

n

Impr

ove

finan

cial

in

term

edia

tion

incl

udin

g fo

r mic

ro,

smal

l, m

ediu

m

ente

rpris

es a

nd

unba

nked

ho

useh

olds

Impl

emen

tatio

n of

BO

M s

trate

gy, G

OM

inte

rest

bro

ught

to p

oint

of

sal

e 24

√

25

Sub

mis

sion

of

prop

osal

of

soci

al p

rote

ctio

n la

w to

pa

rliam

ent

Impr

ove

insu

ranc

e an

d so

cial

pr

otec

tion

sect

ors

Impr

ovem

ent o

f soc

ial p

rote

ctio

n sy

stem

26

Beg

inni

ng o

f ac

tuar

ial s

tudy

of

soc

ial s

ecur

ity

syst

em

Con

clus

ion

of

actu

aria

l stu

dy

Exp

endi

ture

in P

AR

PA

prio

rity

sect

ors

is a

t lea

st 6

5% o

f tot

al

expe

nditu

re e

xclu

ding

inte

rest

pay

men

ts o

n de

bts.

At l

east

hal

f of

this

65%

is re

late

d to

edu

catio

n an

d he

alth

27

65%

In

dica

ted

in

PA

RP

A II

In

dic

PA

RP

A II

Incr

ease

the

cove

rage

of t

he b

udge

t as

a pr

ereq

uisi

te fo

r es

tabl

ishi

ng b

udge

ting

by p

rogr

amm

es

28

Con

clud

e th

e st

udy

on o

ff-bu

dget

s in

he

alth

sec

tor

and

begi

n to

im

plem

ent t

he

reco

mm

enda

tion

s fo

r the

sta

te

budg

et c

ycle

in

2006

in th

e he

alth

sec

tor

Con

clud

e th

e st

udy

for o

ff-bu

dget

s in

ed

ucat

ion

and

impl

emen

t the

re

com

men

dati

ons

for t

he

stat

e bu

dget

cy

cle

in 2

007

Rem

aini

ng

sect

ors

(wat

er,

agric

ultu

re,

and

min

eral

re

sour

ces)

Ref

orm

of t

he

Sta

te F

inan

cial

A

dmin

istra

tion

Sys

tem

Upg

rade

effi

cien

cy

and

effe

ctiv

enes

s of

the

man

agem

ent o

f S

tate

fund

s

Impl

emen

t SIS

TAFE

29

60

% o

f the

sta

te

budg

et in

S

ISTA

FE

(sub

ject

to

conf

irmat

ion

afte

r QA

G

mis

sion

)

100

% o

f sta

te

budg

et

(sub

ject

to

conf

irmat

ion

by

QA

G m

issi

on)

Stre

ngth

enin

g ta

x ad

min

istra

tion

and

crea

tion

of C

RA

by

2006

30

A

ppro

val o

f re

gula

tions

and

pr

oced

ures

for

CR

A

Est

ablis

hing

of

CR

A

Cre

atio

n of

a

favo

urab

le

envi

ronm

ent f

or

priv

ate

sect

or a

ctio

n

Mac

roec

onom

ic

and

finan

cial

po

licie

s

Tax

Ref

orm

S

impl

er a

nd m

ore

cove

ring,

fair

and

bala

nced

taxa

tion

Tota

l rev

enue

as

% o

f GD

P

31

14.9

%

15.1

%

15.1

%

Gen

eral

Bud

get S

uppo

rt in

Moz

ambi

que

(262

)

Gov

ernm

ent P

rogr

amm

e –

PAR

PA

Prio

ritie

s PA

F 20

05 ta

rget

s St

rate

gic

Obj

ectiv

es

Are

as

Sub-

area

s O

bjec

tives

A

ctio

ns

Indi

cato

rs

No.

20

05

2006

20

07

Pro

cure

men

t A

dopt

ion

of a

tra

nspa

rent

and

ef

ficie

nt s

yste

m

Impl

emen

t a m

oder

n pr

ocur

emen

t sys

tem

in a

ccor

danc

e w

ith th

e be

st in

tern

atio

nal p

ract

ices

bas

ed o

n th

e ne

w p

rocu

rem

ent

regu

latio

n an

d in

con

nect

ion

with

e-S

ISTA

FE

32

Beg

inni

ng o

f im

plem

enta

tion

Impl

emen

tatio

n Im

plem

enta

tion

Impl

emen

t prio

rity

com

pone

nts

of th

e st

rate

gic

plan

in in

tern

al

audi

t 33

√

√ √

Aud

iting

Im

prov

e co

vera

ge

and

func

tion

of

inte

rnal

and

ex

tern

al a

uditi

ng

Rev

isio

n of

the

func

tions

of t

he e

xter

nal a

uditi

ng in

stitu

tions

[see

A

ide

Mém

oire

] 34

PA

RP

A re

visi

on c

oncl

uded

thro

ugh

a co

nsul

tativ

e pr

oces

s 35

√

Pla

nnin

g an

d M

onito

ring

Har

mon

isat

ion

of

med

ium

and

long

te

rm in

stru

men

ts

Sin

gle

proc

ess

of C

FMP

, PE

S a

nd s

tate

bud

get f

orm

ulat

ion

36

Sta

rt S

tart

and

syst

emat

ise

the

mon

itorin

g of

C

FMP

/PE

S/s

tate

bud

get

Pre

pare

pol

icy

and

stra

tegy

of d

ecen

tralis

atio

n

37

Pre

pare

d A

ppro

ved

Est

ablis

hmen

t of c

riter

ia fo

r the

dis

tribu

tion

of fi

nanc

ial r

esou

rces

to

dis

trict

s

38

Pro

pose

d/P

repa

red

App

rove

d/im

plem

ente

d

Dec

entra

lisat

ion

FCA

tran

sfer

red

to e

ach

mun

icip

ality

(pla

nnin

g an

d ex

ecut

ion)

an

d to

tal r

even

ue o

f eac

h m

unic

ipal

ity/p

erso

n (p

lann

ing)

39

V

alue

and

V

alue

/Per

son

avai

labl

e

Val

ue a

nd

Val

ue/P

erso

n w

ill b

e av

aila

ble

Val

ue a

nd

Val

ue/P

erso

n w

ill b

e av

aila

ble

Gov

ernm

ent a

ppro

val o

f the

sal

ary

polic

y fo

r the

med

ium

term

(s

alar

y re

form

) and

impl

emen

tatio

n be

gun,

sta

rting

with

the

harm

onis

ed d

atab

ase

40

App

rova

l Im

plem

enta

tion

R

atio

nalis

atio

n of

st

ruct

ures

and

pr

oces

ses

Res

truct

urin

g pl

ans

agre

ed in

acc

orda

nce

with

MTE

F/C

FMP

and

im

plem

enta

tion

begu

n in

MIS

AU

, Min

istry

of E

duca

tion

(MIN

ED

), M

AD

ER

, MA

E, M

IC a

nd M

PF

41

Pla

ns a

gree

d an

d im

plem

enta

tion

begu

n

Impl

emen

tatio

n

Stu

dy o

n go

od g

over

nanc

e, c

orru

ptio

n an

d se

rvic

e de

liver

y co

mpl

eted

and

resu

lting

ant

i-cor

rupt

ion

stra

tegy

impl

emen

ted

42

Stra

tegy

ap

prov

al a

nd

begi

nnin

g of

im

plem

enta

tion

A c

orru

ptio

n su

rvey

in th

e ju

stic

e sy

stem

(with

sol

utio

ns p

ropo

sed

for p

roce

dura

l sim

plifi

catio

n an

d ad

dres

sing

oth

er c

ause

s of

co

rrup

tion)

and

reco

mm

enda

tions

impl

emen

ted

43

Pub

licat

ion

of

first

stu

dy a

nd

iden

tific

atio

n of

ot

her i

nstit

utio

ns

to b

e in

clud

ed

Follo

w-u

p of

th

e st

udy

Cre

atio

n of

a

favo

urab

le

envi

ronm

ent f

or

priv

ate

sect

or a

ctio

n

Goo

d G

over

nanc

e,

Lega

lity

and

Just

ice

(figh

t co

rrup

tion)

Pub

lic S

ecto

r R

efor

m

Com

bat c

orru

ptio

n

Incr

ease

gov

ernm

ent r

esou

rces

(esp

ecia

lly b

ette

r em

ploy

men

t of

pers

onne

l) fo

r the

ant

i-cor

rupt

ion

units

44

√ √

√

Ann

ex 7

: Per

form

ance

Ass

essm

ent F

ram

ewor

k

(263

)

Gov

ernm

ent P

rogr

amm

e –

PAR

PA

Prio

ritie

s PA

F 20

05 ta

rget

s St

rate

gic

Obj

ectiv

es

Are

as

Sub-

area

s O

bjec

tives

A

ctio

ns

Indi

cato

rs

No.

20

05

2006

20

07

Incr

ease

the

num

ber o

f jud

icia

l ver

dict

s re

ache

d (s

ubje

ct to

ch

ange

) (se

e A

ide

Mém

oire

) 45

42

% (B

ase

year

is

200

2)

50%

(Bas

e ye

ar is

200

2)

60%

(Bas

e ye

ar is

200

2)

Incr

ease

effi

cien

cy

in th

e pr

ovis

ion

of

serv

ices

by

the

just

ice

syst

em

Dec

reas

e in

num

ber o

f pr

ison

ers

that

aw

ait

accu

satio

n an

d tri

al

Max

imum

% o

f pris

oner

s aw

aitin

g tri

al

46

57%

50

%

App

rova

l of v

isio

n do

cum

ent b

y C

M a

nd re

visi

on o

f PE

I and

P

OP

EI

47

√ Im

plem

enta

tion

P

rese

ntat

ion

of a

long

-term

re

form

pro

gram

me

that

in

clud

es p

lann

ing,

bud

getin

g an

d m

onito

ring

syst

ems

whi

ch g

ive

prio

rity

to

serv

ices

del

iver

ed in

the

sect

or

Con

solid

ate

thro

ugh

PO

PE

I a

harm

onis

ed s

yste

m o

f M&

E

48

√

Rev

isio

n of

the

Civ

il P

roce

ss

Cod

e

49a)

S

ubm

issi

on to

pa

rliam

ent

Rev

isio

n of

the

orga

nic

law

of

judi

cial

cou

rts in

clud

ing

com

mer

cial

sec

tions

49b)

S

ubm

issi

on to

pa

rliam

ent

Rev

isio

n of

the

Not

ary

Cod

e

49c)

S

ubm

issi

on to

pa

rliam

ent

Rev

isio

n of

the

pena

l cod

e

49d)

S

ubm

issi

on to

pa

rliam

ent

Con

solid

atio

n of

pe

ace,

nat

iona

l un

ity, j

ustic

e an

d de

moc

racy

Goo

d G

over

nanc

e,

Lega

lity

and

Just

ice

(figh

t co

rrup

tion)

Just

ice

Ref

orm

Sim

plifi

catio

n an

d fa

ster

pro

cess

ing

Law

refo

rms

Rev

isio

n of

pris

on le

gisl

atio

n 49

e)

Sub

mis

sion

to

parli

amen

t

Documents

Mozambique Country Report ANNEXES - FANRPAN...• Public-service performance incentives are strengthened, so that policies are made and implemented, audit and procurement systems work,