12 November 2008
Maputo — The Mozambican government and the World Bank signed in Maputo on Tuesday two agreements whereby the Bank is to grant 100 million US dollars to support the Mozambican state budget for 2009 and also to help respond to the high cost of foodstuffs.
Of the total amount, 90 million dollars, to be disbursed by July 2009, is a loan to support the state budget, and the remainder is a grant to help in actions of food production to guarantee Mozambican food security.
This is a very substantial increase in direct budget support from the World Bank. In 2008 the Bank has provided budget support of 70 million dollars, and the pledge made in May was that the same amount would be provided in 2009.
The documents were signed by Planning and Development Minister Aiuba Cuereneia and World Bank regional director Michael Baxter.
At the ceremony, Baxter said that this money is aiming at "sustaining high levels of growth through actions to facilitate and deepen institutional reforms in the areas of macro-economic and public financial management, and procurement'.
For his part, Cuereneia said that by granting this money, the World Bank is fulfilling its commitment to support the Mozambican government in implementing its anti-poverty strategy.
"The Mozambican government appreciates the World Bank's donation to finance a response to the food crisis, more concretely the contribution to implementing our Food Production Action Plan for the period 2008-2011, adopted as a means to contribute to self-sufficiency in terms of food and reduce the country's vulnerability in face of the increasing prices on the international market", he said.
The 90 million dollar budget support credit comes from the International Development Association (IDA), the World Bank's soft loans arm, and was approved by the Bank's Executive Board a week ago. It is the Fifth Poverty Reduction Support Credit to Mozambique and, according to a World Bank press release, will support implement of phase two of the government's Action Plan for the Reduction of Absolute Poverty ("PARPA II")
The release added that this is "the largest budget support operation by the World Bank in a single year in Mozambique, and the largest single annual budget support disbursement by any development partner in Mozambique".
It cited Baxter as saying that the credit, plus the food production grant, demonstrate "the World Bank's commitment to help Mozambique pursue a robust reform agenda to remove obstacles to economic growth that is broadly shared. It will also support the continuation of key governance reforms in public financial management and procurement."
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