o privatization, and
adverse effects of weather on agriculture in early 2000 and 2001
restrained real GDP growth. Despite drought problems in 2002, GDP
rose 4.0%, followed by a solid 5.0% increase in 2003. The first
applications under the land privatization law have been marked by a
number of disputes over particular sites. Russia claims Mongolia
owes it $11 billion from the Soviet period; any settlement could
substantially increase Mongolia's foreign debt burden.

Montserrat
Severe volcanic activity, which began in July 1995, has
put a damper on this small, open economy. A catastrophic eruption in
June 1997 closed the airports and seaports, causing further economic
and social dislocation. Two-thirds of the 12,000 inhabitants fled
the island. Some began to return in 1998, but lack of housing
limited the number. The agriculture sector continued to be affected
by the lack of suitable land for farming and the destruction of
crops. Prospects for the economy depend largely on developments in
relation to the volcano and on public sector construction activity.
The UK has launched a three-year $122.8 million aid program to help
reconstruct the economy. Half of the island is expected to remain
uninhabitable for another decade.

Morocco
Morocco faces the problems typical of developing countries -
restraining government spending, reducing constraints on private
activity and foreign trade, and achieving sustainable economic
growth. Despite structural adjustment programs supported by the IMF,
the World Bank, and the Paris Club, the dirham is only fully
convertible for current account transactions. Reforms of the
financial sector are being contemplated. Droughts depressed activity
in the key agricultural sector and contributed to a stagnant economy
in 2002. Morocco reported large foreign exchange inflows from the
sale of a mobile telephone license, and partial privatization of the
state-owned telecommunications company and the state tobacco
company. Favorable rainfall in 2003 led to a growth of 6%.
Formidable long-term challenges include: preparing the economy for
freer trade with the EU and US, improving education, and attracting
foreign investment to boost living standards and job prospects for
Morocco's youth.

Mozambique
At independence in 1975, Mozambique was one of the
world's poorest countries. Socialist mismanagement and a brutal
civil war from