IMF release proverty reduction loan

The International Monetary Fund (IMF) has completed its first review of Mozambique's economic performance in terms of the Poverty Reduction and Growth Facility (PRGF). PRGF arrangements are the IMF's concessional loan facility for low-income countries, and programmes supported by it are based on the poverty reduction strategy. Mozambique's three-year facility has been running since July 2004. In a statement the IMF said its executive board had completed the first review of Mozambique's performance under a US $17.1 million PRGF. "The completion of the review enables the release an amount equivalent to ... US $2.4 million, which will bring total disbursements under the PRGF arrangement to an amount equivalent to ... about $4.9 million," the Fund said. Following the executive board's discussion on Mozambique's economic performance, Takatoshi Kato, deputy managing director and acting chair, said: "Mozambique's economic performance under the PRGF-supported programme continued to be satisfactory during 2004. Real GDP growth has remained strong; inflation has declined to single-digit levels; and the international reserve position has further strengthened. Progress has also been made on the structural front, notwithstanding some delays related, in part, to capacity constraints and in reducing the still high levels of poverty." The IMF aims to support the country's economic reform programme into 2006. "The government's programme for 2005 seeks to sustain rapid growth, consolidate the gains toward price stability and deepen structural reforms. Achieving the programme's primary deficit target will require strong efforts to strengthen tax revenue, as well as close monitoring of the government's wage bill and restraint in non-priority outlays," Kato commented. "The authorities are moving ahead with the steps required to establish a Central Revenue Authority, and with a comprehensive public sector reform programme, supported by the World Bank," he added. Improvements in governance and the judicial system were key to stimulating private sector development in Mozambique, the IMF noted. The PRGF loans carry an annual interest rate of 0.5 percent, repayable over 10 years, with a five and a half year grace period on repaying the principal.