Maputo — The Swiss government has granted 24 million Swiss francs (21 million US dollars) in direct support for the Mozambican state budget for the period 2007-2009.

A document to that effect was signed in Maputo on Tuersday between Mozambican Finance Minister Manuel Chang and the Swiss Ambassador, Thomas Litscher.

The money is part of Switzerland's pledge made earlier in the year when all 19 donors and funding agencies that provide direct budget support told the government what their commitment for 2008 would be.

At the ceremony, Chang, thanking the ambassador for the grant, said 'We want to make it clear here that this money will be used in areas that were discused with Switzerland".

The Mozambican budget, approved by the country's parliament, the Assembly of the Republic, last week, is heavily dependent on donor funding. Public expenditure in 2008 is scheduled to reach 89 billion meticais (about 3.6 billion US dollars).

But the state's revenue from taxation and other domestic sources is forecast to cover only 44 per cent of that. That leaves a deficit of 50.2 billion meticais (just over two billion US dollars) which must be covered almost entirely by foreign aid.

When Chang introduced the budget in the Assembly, he said that 48.8 per cent of next year's foreign aid will take the form of direct budget support, while 51.2 per cent will be earmarked for specific programmes and projects. He was confident that trust in the government is such that Mozambique's foreign partners will indeed provide these funds.

To avoid running up unsustainable debts, the government has ensured that over two thirds (68.1 per cent) of this foreign aid consists of grants, while only 31.9 per cent is in loan form.