Maputo - Mozambique's government has presented a budget geared to fighting poverty in the southern African country, where more than half of the population lives on less than a dollar a day.

Two-thirds of the two-billion-dollar budget will be spent on poverty reduction initiatives, Prime Minister Luisa Diogo told parliament on Tuesday.

President Armando Guebuza pledged to step up the fight against poverty when he took office in February, taking over from Joaquim Chissano who was in power for 18 years in Mozambique.

One of Africa's poorest countries, Mozambique is still reeling from the devastation wrought by the 1976-1992 civil war that claimed up to one million lives.

But the former Portuguese colony of 17 million people has managed to lower poverty levels from 69 percent in the years following the war to some 54 percent now.

"The government needs $2-billion to respond to the challenges of its social and economic plan for 2005. The strategy of this programme is poverty reduction, social and economic development focused on rural areas and keeping public spending under control," said Diogo.

The prime minister also said that Mozambique had managed to reduce its dependency on foreign aid, which now accounts for 45 percent of the budget.

Parliament is due to vote on the budget on Friday. - Sapa-AFP