16 July 2013

Mozambique Receives U.S.$110 Million From World Bank to Help Tackle Bottlenecks for Achieving Shared Growth and Prosperity

press release

Washington — The World Bank Board of Executive Directors today approved an International Development Association (IDA) credit[1] of US$110 million equivalent in support of the Government of Mozambique's poverty reduction priorities.

This operation is an integral part of the Bank's strategy to support the Government of Mozambique (GoM)'s Action Plan for the Reduction of Poverty (PARP).

Support to the GoM's PARP is underpinned by the Performance Assessment Framework (PAF) agreed upon by the GoM and the nineteen external partners (the G-19)[2] providing general budget support (GBS) to Mozambique.

The World Bank GBS is channeled through a policy lending instrument, the Poverty Reduction Support Credit (PRSC).

"This is the ninth of an annual PRSC series of World Bank budget support operations to Mozambique since 2004, and constitutes yet another unequivocal commitment to the country's medium and long term goals," said Mr. Laurence Clarke, Country Director for Mozambique, Angola, and São-Tomé and Principe.

"The PRSC series support the country policy development agenda by tackling those policy bottlenecks that may constitute impediments for a long-term sustainable and broad-based growth."

Specifically, the PRSC9 will assist the GoM in its efforts to (i) improve the business climate by simplifying business licenses and registration; (ii) improve transparency in the management of extractive industries; (iii) expand the scope of social protection programs while enhancing their targeting, design and impact on beneficiaries and (iv) improve public financial management in auditing, public investment management and debt management.

"This operation has become over the years a critical World Bank policy lending instrument necessary to unleash the country's potential by supporting the right reforms that help expand investments as well as make the most out of existing ones to the wider economy," added Mr. Julio Revilla, World Bank Mozambique Lead Economist and Task Team Leader for the PRSC series.

"This development policy operation (PRSC) coexists with the Bank's investment lending and technical assistance that support the development of government systems and capacities."

The PRSC 9 is a key instrument of harmonization with donors. It is based on a MoU signed between the GoM and 19 donors supporting the State budget, including the World Bank; the principle of which are as follows: (i) predictability and alignment with domestic systems; (ii) joint monitoring, and policy actions or expected outcomes in the program are to be based on the common Performance Assessment Framework (PAF); (iii) no separate reporting to the donors is required; and (iv) mutual accountability.

The PRSC series is a component of the World Bank's own Country Partnership Strategy for Mozambique, and its financing is complementary to other World Bank investment lending and technical assistance operations.

A detailed description of the credit is contained in the PRSC-9 project document, which is available at the web link below, or by requesting a copy through an email to aotacala@worldbank.org, or by contacting the World Bank office in Maputo.

[1] The credit is provided on standard International Development Association (IDA) terms, with a commitment fee of 0.5 percent, a service charge of 0.75 percent, and a 40 year maturity which includes a 10-year grace period.

[2] The 19 donors are: African Development Bank, Austria, Belgium, Canada, Denmark, EU, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, UK, and the World Bank.

Two associate members, the USA and United Nations, participate in the G19 policy dialogue, although they do not provide budget support. In addition, the IMF is an ex-officio member of the G19.

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