Maputo — The World Bank on Monday announced the cancellation of most of Mozambique's debt to its soft loans arm, the International Development Association (IDA), in line with the Multilateral Debt Relief Initiative (MDRI) agreed at the 2005 summit in Scotland of the G8 group of most industrialised nations.

A World Bank press release put the amount of debt to the IDA cancelled at 1.306 billion US dollars.

It says that, when the amount of World Bank debt relief to Mozambique under the two instalments of the HIPC (Heavily Indebted Poor Countries) initiative is factored in, the total amount of debt to the IDA cancelled rises to 2.361 billion dollars.

Before MDRI, Mozambique was to have paid 32 million dollars in debt service to the IDA in 2007-08, and a further 97 million dollars in 2009-11. Now nothing at all is owing for this period.

Cited by the release, the World Bank country director for Mozambique, Michael Baxter, said "The debt relief under MDRI will allow the government of Mozambique to allocate more resources for badly needed expenditure on, for example, education, health or infrastructure".

The release added that MDRI has cancelled all debts owing to the IDA, the International Monetary Fund (IMF) and the African Development Bank (ADB) that were outstanding at the end of 2003. World Bank President Paul Wolfowitz declared "We have secured a level of financing commitments from donors that allows us to begin implementing the Multilateral Debt Relief Initiative.

Additional debt relief will help Mozambique channel resources into programmes that directly help the people who need it most".

This relief has been extended to all 19 countries (15 in sub-Saharan Africa and four in Latin America) that have reached the "completion point" under HIPC.