The Mozambican government and the World Bank Tuesday signed two agreements under which the bank is to grant US$ 100 million to support the state budget for 2009 and also to help respond to the high cost of foodstu f fs.
Of the total amount, US$ 90 million, to be disbursed by July 2009, is a loan to support the state budget and the remainder is a grant to help to boost food prod u ction to guarantee food security in the country.
This is a very substantial increase in direct budget support from the World Bank .
This year, the bank has provided budget support of US$ 70 million 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 a nd World Bank regional director Michael Baxter.
At the ceremony, Baxter said the money was aimed at “sustaining high levels of g rowth through actions to facilitate and deepen institutional reforms in the area s of macro-economic and public financial management, and procurement.”
Cuereneia said that by granting the money, the World Bank was fulfilling its com mitment to support the Mozambican government in implementing its anti-poverty st r ategy.
“The Mozambican government appreciates the World Bank’s donation to finance a re sponse to the food crisis, more concretely the contribution to implementing our F ood Production Action Plan for the period 2008-2011, adopted as a means to contr i bute 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 US$ 90 million budget support credit comes from the International Developmen t Association (IDA), the World Bank’s soft loans arm, and was approved by the ba n k’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 implementation of phase two of the gove r nment’s Action Plan for the Reduction of Absolute Poverty (“PARPA II”)
The release added that this was “the largest budget support operation by the Wor ld Bank in a single year in Mozambique, and the largest single annual budget sup p ort disbursement by any development partner in Mozambique”.
It cited Baxter as saying that the credit, plus the food production grant, demon strate “the World Bank’s commitment to help Mozambique pursue a robust reform ag e nda to remove obstacles to economic growth that is broadly shared.
It will also support the continuation of key governance reforms in public financ ial management and procurement.”