Mozambique Receives $100 Million in Budget Support from the World Bank

Contacts:

Antonio Nucifora
Tel: +258 21 48 23 71
Email: anucifora@worldbank.org

Rafael Saute
Tel: + 258 21 48 23 24
Email: rsaute@worldbank.org

Available in: Português

WASHINGTON, November 4, 2008 – The World Bank Board of Executive Directors today approved for Mozambique an International Development Association (IDA) credit * of $90 million and a grant ** of $10 million. The credit and grant represent the Fifth Poverty Reduction Support Credit (PRSC-5) to Mozambique. The operation supports the implementation of Mozambique’s Second Action Plan for the Reduction of Absolute Poverty (“PARPA II”), and also assists the Government’s response to the increase in global food and fuel prices during 2008.

The PRSC-5 is part of a series of annual operations that finance the government budget and support the implementation of key policy actions outlined in PARPA II. PRSC operations are designed in the context of the harmonized policy and monitoring framework agreed by the Government and the development partners who provide general budget support to the Government of Mozambique.

“The credit and grant operation demonstrates the World Bank’s commitment to help Mozambique pursue a robust reform agenda to remove obstacles to economic growth that is broadly shared. The financing also supports the country’s response to the effects of the higher global food and fuel prices,” said Michael Baxter, Country Director for Mozambique, Angola, Malawi, Zambia and Zimbabwe. “It will also support the continuation of key governance reforms in public financial management and procurement.”

In line with PARPA II, the PRSC-5 focuses on sustaining rapid economic growth that is broadly shared across all groups. It will specifically help the Goverment to: (i) consolidate and deepen the institutional reforms in macroeconomic management and public financial management; (ii) boost reforms in governance through decentralization that improves public investments and service delivery at the provincial and district levels, as well as through support public sector reforms; and (iii) remove constraints to economic growth such as poor infrastructure and, at the same time, promote agricultural growth. In addition, the grant component of the PRSC-5 will assist financing the Government's response to the food and fuel price crisis, which is focused on increasing agricultural production and reducing future vulnerability to increases in food prices.

“The PRSC-5 supports the Government’s program of reforms to reduce poverty and develop a strong basis for economic growth in Mozambique, ” a dded Antonio Nucifora, theWorld Bank Senior Economist in charge of the PRSC series. “To promote rapid and shared growth, future PRSCs will give increased attention to improving the environment for private sector investments and exports, especially in agriculture and labor-intensive industries.”

The credit and grant operation, which totals $100 million, represents over one-third of expected commitments to Mozambique by the World Bank during its 2009 fiscal year. It is also 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.

The PRSC series is a component of the World Bank’s 2008-2011 Country Partnership Strategy for Mozambique. A detailed description of the credit is contained in the PRSC-5 Program Document, which is available at the web link below, by sending an email to amucavele@worldbank.org, or by requesting a hard copy at the World Bank office in Maputo.