114. From the early 1980s, Mozambique was plunged into an economic crisis. Production plummeted, half the rural primary schools were burned down or forced to close, the health network shrank by more than a third, and the country began to default on its debt repayments. By the time President Joaquim Chissano and RENAMO leader Afonso Dhlakama signed the GPA in 1992, much of the country’s physical infrastructure – roads, bridges, railways, sugar mills, rural shops and more – lay in ruins. Annual per capita GDP had fallen from US$133 in 1981 to US$90 in 1993. 115. Although exports increased by 83 per cent between 1977 and 1981, a number of serious economic setbacks developed as the civil war continued. The country’s agricultural policy failed due to the abuse and misuse of resources. A large proportion of industrial workers started leaving the country, which led to a fall in the industry sector’s share of the gross national product (GNP) from 40 to 27 per cent between 1981 and 1986. Revenues decreased as export earnings declined and imports increased during the same period until the early 1990s, resulting in faulty prioritisation and a sharp downward trend in economic development. This was a poor base on which the government could build in the post-war era. 116. Early in 2000, a cyclone caused widespread flooding in the country, killing hundreds and devastating the already precarious infrastructure. There were widespread suspicions that foreign aid resources had been diverted by powerful leaders of FRELIMO. Carlos Cardoso, a journalist investigating these allegations, was murdered and to date his death has not been explained satisfactorily. 117. Much of the economic recovery following the end of the civil war of 1977–92 has been led by investors and tourists from South Africa and East Asia. A number of returning Portuguese nationals have invested in the country, as well as some Italian organisations. However, the country remains one of the poorest in the world. Economic Reforms 118. In response to the national economic collapse and the changing international context, the government launched an SAP in 1987 in order to reverse the decline in production by creating better conditions for rural populations; to ensure a minimum level of consumption and income; to reduce domestic financial imbalances; to strengthen the balance of payments; and to lay the foundation for economic growth. 11 The implementation of the programme entailed two main stages, namely, stabilisation and adjustment. The first stage aimed at devaluing the national currency and drastically cutting public expenditures. 11 Kulipossa, F.P. 1987. Draft Report on Mozambique, page 5. 68 A P R M COU N T RY R EV IEW R EP ORT NO. 11