MAPUTO, The World Bank has endorsed a new Country Partnership Framework (CPF) with Mozambique for the 2017-2021 period involving funding totalling about 1.7 billion US dollars.

By announcing this funding, the World Bank appears to have broken ranks with Mozambique’s other main co-operation partners, who are making their continued financial assistance dependent on the outcome of an independent audit into the two billion USD worth of loans contracted with illicit government guarantees by the security-related companies Ematum (Mozambique Tuna Company), Proindicus and MAM (Mozambique Asset Management).

The World Bank statement announcing the new CPF mentions the hidden debts, but has nothing specific to say about the audit. Completing the audit, and the need to put Mozambique’s foreign debt on a sustainable footing, are the conditions which the International Monetary Fund (IMF), the World Bank’s sister organization, is insisting Mozambique must meet before relations can be restored to normal.

When the full extent of Mozambique’s hidden debts became clear in April 2016, the IMF, the World Bank and other western partners suspended financial aid. All 14 donors who used to provide direct support to the State budget halted their disbursements, which have not resumed.

The statement from the World Bank board declared that the new CPF focuses on a set of objectives reflecting the Government of Mozambique’s five-year programme; development priorities identified in the Bank’s own diagnostic; and the institution’s comparative advantages.

The Bank describes Mozambique’s short term prospects as considerably challenging in result of recent revelations regarding unreported debts.

The World Bank adds that its focus will be on helping the country to address the macro-economic consequences of the undisclosed debt and restore confidence”.

“The Bank will help the authorities address these challenges in close coordination with the IMF and will make use of advisory support on fiscal consolidation and debt management, among other instruments. It will also support efforts to address underlining causes of conflict such as those pertaining to land, forest, and natural resources management.”

The key members of the World Bank Group for implementing the new strategy are the International Development Association (IDA), which provides soft loans to developing countries, and the Bank’s private sector arm, the International Finance Corporation (IFC).

They will work side by side in stimulating and leveraging the private sector, including in key sectors such as agriculture (and its value chains) and energy, says the statement. IFC’s investments and advisory services in the financial sector will remain a strategic priority, helping to increase access to finance for businesses across the country.”

The 1.7 billion USD will come from the IDA. About 120 million USD will be available this year, and from 2018 to 2021, around 410 million USD a year will be available. The World Bank used to be one of the largest providers of direct budget support, and the release says resumption of this support will depend on Mozambique’s progress in restoring debt sustainability and an adequate fiscal and macroeconomic framework.

The World Bank’s country director for Mozambique, Mark Lundell, said: This approval comes at a crucial juncture for Mozambique. The country needs to prepare for its upcoming resource-rich status and develop a more diversified and productive economy, which will depend on how effectively natural wealth is reinvested into human, physical, and institutional capital. Among other things, this strategy will support institutions and build systems in Mozambique to achieve just that.