Strong World Bank support for poverty reduction

Mozambique's poverty reduction strategy has received strong donor support from the World Bank Consultative Group, with the country being offered more money than it had requested. Following a meeting of bilateral and multilateral agencies in France last week to discuss the country's progress towards reducing poverty, the government announced that donors had pledged US $790 million - $110 million more than the requested amount. Seventy-five percent of the funds will take the form of grants, and the remaining 25 percent will be soft loans. About 40 percent of total financing for development will be provided in the form of budget support. "Preliminary data also show that key development indicators improved - including, in particular, school enrolment and access to health services. In this context, partners urged the government to remain on course and further consolidate its achievements by ensuring free and fair elections this year and next," the group said in statement. It was agreed at the meeting that "there is much work that remains to be done. In particular, many partners saw an urgent need to improve efficiency and transparency in the legal and judicial system, both to provide businesses with expedient dispute resolution and to help reduce the incidence of petty and large-scale corruption, which erodes the business and social fabric of Mozambique". The group also called for further action in the banking sector, including expediting loan recovery, strengthening supervision of the financial sector, and completing government divestiture from the sector. "In addition, partners urged the government to continue to improve the investment climate, particularly for the small- and medium-sized enterprises that provide most of the jobs in Mozambique," the statement read.