Resumption of support for Mozambique depends on debt sustainability – World Bank

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Resumption of support for Mozambique depends on debt sustainability – World Bank

11:29 CAT | 25 Jul 2017

World Bank Executive Director Andrew Bvumbe said yesterday that resumption of the institution’s support for the Mozambican state budget would depend on the sustainability of the country’s debt, and that it was therefore imperative to control public spending.

“The issue of debt sustainability is critical [for resumption of state budget support]. Debt sustainability is part of the assessment for resuming budget support,” Bvumbe, who is Zimbabwean, told a press conference during his two-day visit yesterday.

Bvumbe said the assessment of conditions for the resumption of financial aid to Mozambique would take into account the success of the Government’s effort to restructure public debt, including hidden debt.

“We will have to look at the indicators and what can be done in terms of the opportunity to restructure and make debt sustainable in order to help the country,” the World Bank executive director said.

World Bank representative in Mozambique, Mark Lundell, explained that the institution’s decision to keep direct support to the state budget frozen would not affect aid to priority social areas such as education, health, agriculture and infrastructure.

Lundell explained that maintaining aid to key social areas was necessary to prevent the most deprived members of the population being penalised by cutting aid, and Bvumbe announced yesterday that the World Bank would spend US$1.2 billion in Mozambique financing agriculture, health, education and infrastructure over the next three years.

“The financial envelope for Mozambique over the next three years is estimated at US$1.2 billion,” Bvumbe told a news conference at the beginning of his two-day visit.

The World Bank suspended aid to the Mozambican state budget in late 2015 when news broke that the previous government secretly endorsed debts of more than US$2 billion between 2013 and 2014. The International Monetary Fund and other donor countries also froze contributions.

Source: Lusa