MOZAMBIQUE: World Bank approves $120 million credit

[ This report does not necessarily reflect the views of the United Nations]

JOHANNESBURG, 15 Sep 2005 (IRIN) - The World Bank's board of directors has approved US $120 million worth of credit to Mozambique to support implementation of the government's Action Plan for the Reduction of Absolute Poverty (PARPA), the Bank said in a statement.

The facility was granted on standard International Development Association (IDA) terms, with a commitment fee of 0.5 percent, a service charge of 0.75 percent and a maturity of 40 years, including a 10-year period of grace.

"The second Poverty Reduction Support Credit (PRSC) would continue to support government initiatives to strengthen governance and public sector management to improve the delivery of basic public services, particularly in health, education, and rural water and sanitation," the Bank noted.

It would also attract investors by enhancing the business environment and broadening human resource development, and improve donor coordination to increase the effectiveness of assistance.

"With the continuance of Mozambique's good economic performance, the second credit will deepen support for the government's reform agenda to accelerate growth and reduce poverty, and achieve the Millennium Development Goals," Gregor Binkert, World Bank Task Manager for the programme, was quoted as saying. "The new president and the government have reaffirmed their commitment to the reform agenda, as articulated in the five-year programme tabled in parliament in March 2005."

The first disbursement of $60 million will be used in the government's 2005 budget year; a second disbursement of equal amount is expected to be released in January for fiscal 2006.

Although the Bank's PRSCs generally consisted of a single disbursement, Mozambique's credit was designed with two disbursements so as to be more harmonised with other donor support and allow the alignment of future PRSCs with the country's budget cycle.

Since the end of the civil war in 1992, Mozambique has maintained an annual average economic growth of 8 percent. Real GDP growth was described as "robust in 2003 and 2004", when it was estimated at 7.8 percent and 7.2 percent respectively.

"Strong economic growth and efforts to share that growth with the poor, notably women and other marginalised groups, have contributed in reducing poverty in Mozambique from 69 percent in 1997 to 54.5 percent in 2003," the Bank commented.

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