Republic of Mozambique : Fourth Review Under the Three-Year Arrangement Under the Poverty Reduction and Growth Facility, Financing Assurances Review, and Request for Modification of Performance Criteria

Mozambique's strong macroeconomic performance continued in 2005 and early 2006, despite exogenous shocks. Fiscal results were commendable, and all performance criteria through end-March 2006 were met. Although the macroeconomic outlook remains favorable, vigilance will be required, in light of volatile oil prices and unpredictable weather. The main challenges are sustaining broad-based economic growth and making further inroads in alleviating poverty through the implementation of a poverty reduction strategy for 2006-09. The authorities' commitment to create sufficient fiscal space for priority investments is welcomed.