Maputo — The Bank of Mozambique and the French Development Agency (AFD) signed a special convention on Friday for the refinancing of Mozambique's debt to France to the amount of 293 billion meticais (about 12 million US dollars).

The convention was signed by the governor of the Bank, Adriano Maleiane, and the Maputo director of the AFD, Francoise Desmazieres.

According to Maleiane, under this agreement, "the debt service that we ought to pay to France can be transformed into funding for economic projects. The sum of about 12 million euros will be channelled to finance the general state budget".

Mozambique has already signed several other debt relief agreements with France. With Friday's agreement, the amount of debt servicing canceled has risen to 25 million Euros.

For Maleiane, this agreement was unprecedented. "It's the first time that the debt service we are paying comes back to finance the state budget", he said. "We hope for other, similar agreements." Meanwhile, the European Union has approved support for the Mozambican state budget to the tune of 168 million euros over a four year period. According to a press statement from the Maputo delegation of the European Commission, this support "intends to help continue the positive results achieved in the economic and social area in Mozambique, with special stress on activities that contribute to poverty reduction".

The release adds that in 2000 and 2001, the European Commission supported the Mozambican state budget with grants totalling 121.5 million euros.