September 16, 2005

Credit by World Bank for "poverty reduction initiatives"

The Mozambican government and the World Bank have signed a legal agreement on the credit of 120 million US$, to be used in poverty reduction initiatives. "It was thanks to the gains from the reforms under way in Mozambique that the World Bank has decided to grant a further credit to assist in the fight against absolute poverty", said the chief economist at the World Bank mission in Maputo, Gregor Binkert.

According to a World Bank statement, the first disbursement (60 million US$) from this credit was possible because of such measures as the government's allocation of around 65 per cent of the budget to priority areas for poverty reduction, and the introduction of a new law on financial institutions intended to improve the functioning of the financial and banking system. The World Bank was particularly pleased with the roll-out of the new computerised state financial management system, known as SISTAFE, which was introduced in 2004. The statement claimed that SISTAFE "has already begun to bring benefits, such as speed in the allocation of financial resources, greater transparency, and greater accountability in the management of public funds".

The second tranche of the credit, also for 60 million US$, will be disbursed in 2006 - but only if the government meets a series of indicators, including the definitive adoption of a new commercial code (replacing a Portuguese code dating back to the 19th century), and reforms in the judicial system. The release mentions specifically the tabling to parliament of a bill to overhaul the functioning of the law courts, and a review of the legal code governing notarial offices.

But perhaps the most important target laid down is that a modern system of procurement, in line with international standards, should be adopted. The World Bank also wants to see SISTAFE expanded into other Ministries, notably the Ministry of Education, and an increase in the funding for the Central Anti-Corruption Office that operates under the Attorney-General. These demands are broadly in line with the Aide-Memoire agreed in May between the government and those of its foreign partners (including the World Bank) who provide aid directly to the budget. (Agencia de Informacao de Mocambique, Maputo)

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