Resource information
This Country Economic Memorandum reviews
the significant changes Mozambique underwent in the last
five years, specifying that to continue its rapid growth,
and reduce its high levels of poverty, the country will need
to adopt a new set of reforms. Such reforms, focused on
increasing the profitability of agriculture, and promoting
labor-intensive manufacturing activities, hold the best hope
to move poverty into prosperity. Three factors - increased
political stability, deep economic reforms, and foreign
assistance - contributed to the positive developments. But
the country still faces absolute poverty, particularly in
rural areas, where infrastructure, and communications are
lacking, aggravated by high illiteracy, and low life
expectancy rates. Strengthening the macroeconomic
environment will require a reform agenda, reducing the
fiscal deficit by increasing tax revenues, while improving
public spending. Moreover, the country's external
position continues to be vulnerable, thus the external
balance needs to be strengthened. Therefore, infrastructure
recovery, namely roads, would facilitate rural trade, as
will alternative mechanisms not based on trade restrictions,
to address food security concerns, and promote improvements
in productivity. Strategic actions to prod private sector
development, and increase flexibility in the labor market
should be decisive, to enhance as well education, and health.
