Honourable DIOGO, Luísa Dias has been Miniter
of Planning and Finance since January 2000. From 1994
to 1999 she held the position of Vice-Minister of Planning
and Finance.
Luísa Dias Diogo was born on the 11th of April
of 1958, in the district of Mágoè, part
of the central province of Tete. Luísa Dias Diogo
integrated the University "Eduardo Mondlane"
in Maputo where she did a Bachelors in Economics in
1983. By 1992, she had concluded a Masters in Financial
Economics from the University of London. Luísa
Dias Diogo started working at the Ministry of Finance
in 1980 as a technician in the Economic Sectors and
Investments Department (Research Department). In 1984,
she became Director of this same Department. By 1986,
she was named Director of the Budget Department of the
Ministry of Finance, responsible for the National Investment
and Functioning, Defence and Security, and State Treasury
and Public Accounting. From 1993 to 1994, Luísa
Dias Diogo was program officer at the World Bank office
in Maputo, having substituted several times the World
Bank's representative here in the country. In fact Honourable
Luísa Dias Diogo has been involved since in the
shaping of the economic and financial policies of Mozambique.
Over the years she has worked with various international
organizations such as the International Monetary Fund
(IMF), the World Bank, the African Development Bank
(ADB) just to name a few. Since 1980, she has been involved
with the Ministry of Finance. In May 2003, Honourable
Luísa Dias Diogo signed the World Bank's Multi-Sector
HIV/Aids Response Project (MAP) and the Public Sector
Reform Project (PSRP). It was the first time that projects
were signed in the country, and this was considered
an historic moment for Mozambique.
Question 1: Could you please tell us what are
the Ministry's main objectives and guidelines at the
moment?
Answer 1: The Ministry of Planning and Finance
is the governmental Ministry that is responsible for
the planning of financial expenses of the government.
Some say that it is the Ministry that transforms money
into actions and results. We actually plan our finance
in order to direct it to those areas where most needed
to make things happen in Mozambique. At the moment,
we are in the process of reforms and this represents
our main challenge and objective: reforms in terms of
second generation. In fact w after the change from a
central planned economy to a market oriented economy
in 1987 we had the 1st generation reforms designed to
restore basic equilibrium and to re-kindle growth through
pricing, exchange rate and interest rate reforms, tax
and expenditure reforms and the establishment of rudimentary
market institutions accompanied with a stabilization
program. After the peace agreements in 1992 and the
general elections of 1994, the government of Mozambique
studied the issues of reconstructing the country and
its economy, stabilizing inflation. After the elections
of 1999, we looked at the sustainability of the economic
growth in order to obtain durable high-quality growth.
Most countries, after the 1st generation reforms have
problems maintaining the level of growth and loose the
rhythm in terms of economic growth. Therefore we studied
the possibility of doing in-depth reforms and this resulted
in the launch, in 2001, of the public sector reforms
and decided to establish five vectors. One of them is
the financial sector where we have the banking reform
as well as the fiscal reform. There are other sectors
that are undergoing reforms as well, but reforming the
financial sector reform in terms is the key. In fact
we are putting in place a new and different way of doing
governance in order to have results and reduce poverty.
So in 2001 we approved the Poverty Reduction Strategy
(PRSP) also called Action Plan for the Reduction of
Absolute Poverty (PARPA). This requires that we allocate
funds to priority sectors which are agriculture and
rural development, education, health sector, water supply
and infrastructure as well as good governance through
institutional reforms and strengthening of democratic
institutions, the rule of law and macroeconomic stability.
Basically for the period 2000-2004, the Ministry will
concentrate on these reforms with the objective of reducing
poverty.
Thus the Ministry of Planning and Finance has to perform
in terms organizing the annual package of planning the
development, looking at macro indicators and guaranteeing
the finance of all the activities of the government.
Since 2000, the Ministry has managed to approve the
reforms of the financial administration and reforms
of the taxation system. The idea behind the reforms
of the taxation system is to make a broad based taxation
system in accordance with the will to obtain a broad
based growth accompanied with a new legislation on incentives.
This legislation on incentives aims to bring more and
investment and make a fair tax holiday system and stimulate
the most important sectors like agriculture where tax
is almost zero, like infrastructure which represents
Mozambique's major challenge at the moment. More precisely,
the aim is to bring private investors to make public-private
partnerships and thus the tax system has to accommodate
this challenge. Fortunately we are actively working
with the World Bank, which currently has a portfolio
that comprises 21 active projects with commitments of
US$1.1 billion in all major sectors. They are also bringing
financial institutions such as MIGA . Infrastructure
is one of the sectors where we are actively developing
and allocating a major part of our resources.
In terms of macroeconomic stability, it has been strengthen
and is visible in the economic growth which was of 8%
in 2002 and which should be this year around 7.7%. This
is due to the policies and measures we are putting in
place throughout the country. All of this to say that
Mozambique is going through a moment of reforms. Reforms
of planning, of budgeting, of taxation in order to combine
our policies with the agenda of poverty reduction &
eco growth by incentivating local and foreign private
sector to invest.
Question 2: As you say, private investments
play a very important role in the economic development
of Mozambique. Could you give us a brief summary over
the situation with Inwards Foreign Direct Investments
in Mozambique as well as their main destinations?
Answer 2: FDI has been coming into Mozambique
at a very significant level these last few years. Indeed
we are satisfied with its level but nevertheless we
would like to see it diversity itself.
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This diversification should
be not only in terms of sectors, but also in terms of
levels. In fact we do not want only big projects, but
also want small and micro sized investments through joint
ventures and other business agreements because that represents
the real source of sustainable growth. The investment
coming into Mozambique since 1996 is of around $7 billion
of which $2 billion were direct to Mozal and the rest
to the Corridor projects and other major projects. We
would like to see more investments in agriculture and
industry as 80% of our population lives in rural areas
and agriculture represents 30% of the GDP. Therefore,
development in agriculture plays an important role in
poverty reduction. We want labour intensive investments
in agriculture with agro-industries in order to improve
the living standards, which requires income improvements.
We also want investment in infrastructure. Investment
in this sector is happening but we would like it to increase
because tourism, which is one of our major advantage,
requires good infrastructure in roads, energy and telecommunication.
In telecommunication the situation is good as you know
especially with the opening of the mobile sector. Energy
is another sector we want to develop. We signed two days
ago an agreement with South Africa on the development
of IPPs (Hydroelectricity Independent Producers) in a
NEPAD focus. Mozambique possesses great advantages in
terms of hydroelectric power because of the extended river
system we have and our strategic location. This means
we can do something for the region and for NEPAD. Mineral
resources presents very big potentials in Mozambique especially
for small and medium sized companies in gold, and for
Multinationals in graphite which is the best in the region
and coal with very big reserves. We also have potentials
in gas and companies like Sasol have realized it. Thus
investments are happening but we would like to direct
it a bit more towards the priority sectors I have mentioned
earlier on.
Question 3: Attracting foreign investors is
also about incentives and investment legal frameworks.
CPI, the Investment Promotion Centre, is in charge of
this aspect. What is your relationship with CPI?
Answer 3: CPI functions under the Minister of
Planning and Finance and we are really satisfied with
their work. It is a very active and dynamic institution
and it has been very successful over the past year.
The current challenge is to make CPI become more incisive
and more aggressive. This means that CPI should direct
more precisely the investments and the promotion of
the existing opportunities. Additionally CPI has to
constantly adapt the investment legislation, make it
as modern as possible and work hard to become a one-stop
shop. The result should be making Mozambique an easy
country to invest in. This is a major challenge for
CPI. The follow up of the projects is another challenge,
but I believe we should make the sectorial ministries
focus on this and leave CPI with the promotional aspect
of the projects. In fact I believe it would be a lot
more effective if the different sectorial ministries
take care of the investors once they have decided to
invest in Mozambique.
Question 4: Additionally to FDI, Mozambique
receives strong aid from International organizations
such as the World Bank and the IMF. What is the contribution
of this aid?
Answer 4: This international aid is key to the
development of Mozambique. In fact we depend of this
aid in terms of balance of payment around 70% and in
terms of budget more then 50%. Now we are working to
reduce this dependence because for the country this
represents a limitation on our capacity to maneuver
the budget as we wish. There are areas where the donors
are not very kin to invest but which are important for
Mozambique's development. Then negotiating for them
to invest in these areas is very time consuming and
demands a lot of efforts. Nevertheless we must recognize
that Mozambique has had a lot of support and this has
been crucial for the country's development. We have
very good relations with these international donors
and indeed have several important ongoing programs with
them. In is important to understand that reducing this
dependence does not mean that we do not want this aid,
but we wish to have increased space for maneuver and
power to increase the number of programs in place as
well as to help other sectors.
Question 5: Not to long ago, the IMF Deputy
Managing Director, Mr. Shigemitsu Sugisaki stated that
Mozambican authorities were to be congratulated for
their continued satisfactory performance. Also you have
been involved in defining the country's policies for
several years now. In your opinion what has been the
country's greatest achievement as well as yours?
Answer 5: Mr. Shigemitsu Sugisaki is very kind.
The performance of Mozambique in terms of stability
in something that we have worked hard to achieve. Performing
in terms of macroeconomic stability, foreign exchange
stability and so on is key. In terms of growth was we
have doing is concentrating on the sectors that are
important for Mozambique such as agriculture, infrastructure
and industry. We have been doing that through an implementation
of reforms, which in their turns contribute to growth.
For example the liberalization of the mobile phone industry
will have a growth impact. So you understand that these
reforms are not only reforms, they are in fact growth
resources. In the airlines when we opened the market,
more destinations were created. Thus Mozambique's performance,
over the past years, can be explained by these effective
reform processes. Last but not least, the political
stability and the existence of democratic institutions
have been crucial.
Question 6: As a final question, what do you
believe will be your biggest challenge in the years
to come?
Answer 6: The main challenges will be poverty
reduction and economic growth. These are the two areas
we must deliver positive results to our people. And
we are actively working within Mozambique and with international
institutions to effectively meet these challenges. Economic
growth and poverty reduction are two aspects that go
hand in hand and these are the main challenges.
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