The context for the present review of public expenditures was provided by the economic, fiscal, and external resources framework set forth in the agreed Policy Framework Papers (PFP) for 1988-90 and 1989-91. The relevant elements and underlying assumptions of that framework are drawn upon in this report1/. Public resource management will be increasingly important for the successful implementation of the ERP currently underway in Mozambique. The government clearly recognizes the required contribution of the public sector to its stabilization and development efforts and has taken steps to reduce overall fiscal imbalance. The government is also concerned with the effectiveness with which public resources (either generated internally or mobilized externally) are being utilized. In view of the importance of good public resource management, this review of public expenditures identifies key issues which the government is facing or is likely to confront and provides recommendations for dealing with some of these issues. The review examined (a) the evolution of overall revenues and expenditures in relation to other macroeconomic aggregates, (b) the government’s overall 1988-89 investment program, and expenditures in four key sectors, (c) public enterprise finances and, (d) the planning, budgeting and control of public expenditures. Data limitations and uncertainties, particularly with regard to investment and recurrent expenditures, made the analysis of expenditure trade-offs and issues quite difficult, and in a number of areas questions remain which will require further clarification or additional information....