Maputo — The World Bank has provided a 110 million US dollar credit to Mozambique as direct budget support, under an agreement signed in Maputo on Friday by Planning and Cooperation Minister Aiuba Cuereneia and the World Bank representative in Maputo, Luiz Tavares.

The World Bank is one of the 19 donors and funding agencies that provide aid directly to the Mozambican state budget.

This latest credit was approved by the World Bank's board on 12 November, and is intended to assist implementation of the government's Action Plan for the Reduction of absolute Poverty (PARPA II).

This is the Bank's sixth Poverty Reduction Credit for Mozambique. A World Bank press release cited the Bank's Acting Country Director for Mozambique, Peter Nicholas, as saying "The budget support provided by this credit will help the country cope with the effects of the global financial crisis".

"The global crisis also brings added urgency to Mozambique's efforts to improve the business environment and strengthen governance, in particular legal and judicial reforms and the fight against corruption", added Nicholas.

The World Bank release also claims the credit will help the government "to accelerate economic growth, notably by reducing structural constraints to financial intermediation, reducing excessive regulation constraining business activities, and promoting more efficient land use and better access to land".

Other key reforms the Bank wishes to see implemented concern "the efficiency and effectiveness of public financial management, the transparency and efficiency of the public procurement system, and the coverage and efficiency of external audit". Speaking after the signing ceremony, Cuereneia echoed some of the Bank's concerns. He too wished to see "the removal of constraints on economic growth, particularly those which affect the development and expansion of the private sector".

The sum pledged by the World Bank for the 2010 state budget is 20 million dollars more than its commitment in previous years. "This increase is possible due to the growth and robustness of our public institutions", said Cuereneia, "and also to greater confidence and belief in our commitment to and programmes for fighting poverty".

"This gesture will galvanise our undertaking to deepen and speed up reforms in various sectors of the economy, as well as to consolidate macro-economic stability and the management of the public finances", pledged the Minister.

Cuereneia added that, despite the impact of the international financial crisis, the available figures suggest a growth in Mozambican GDP for 2009 of 5.6 per cent. While below the initial target, this figure is still a respectable rate of growth, and greatly outstrips the population growth rate. Cuereneia expected that recovery in the world economy and in demand for Mozambican exports will push the growth rate up to 6.3 per cent in 2010.