• Reference: P-MZ-K00-009
• Approval date: 20/09/2011
• Start date: 15/12/2011
• Appraisal Date: 05/05/2011
• Status: OngoingOnGo
• Implementing Agency: GOVERNEMENT OF MOZAMBIQUE MINISTRY OF FINANCE
• Location: Maputo Mozambique

Management submits the following Report and Recommendation on a proposed loan to Mozambique for UA 60 million to finance the Growth and Public Sector Efficiency (GPSE) program. It will be implemented over three fiscal years (2011 -2013). The GPSE is the fifth general budget support operation for Mozambique, and it sustains and deepens reforms supported by the Bank's previous two Development Budget Support Loans (PRSL I and II). Its reforms are closely aligned to Mozambique's development objectives as set forth in the country's Poverty Reduction Action Plan 2011 -2014. The program follows Paris Declaration principles in harmonizing with the interventions of other development partners, including the European Union, the World Bank, the International Monetary Fund and bilateral donors comprising the G19 aid group for Mozambique. The GPSE program was appraised in June 2011.

1.2 The program's reforms are designed to assist Mozambique in broadening the social impacts of the country's robust economic growth on job creation, income generation and poverty reduction. As such, the GPSE comprises two components. The first deepens the public sector governance reforms supported by the PRSL series to make government finances more transparent, efficient and effective, particularly in relation to public financial management, extractive resource concessions and public-private partnerships. The second focuses on key policy areas related to business, entrepreneurship and employment creation, such as smoothing the regulatory and legal framework for small and medium enterprises (SMEs), trade facilitation, credit expansion and professional skills training. The policy scope of the GPSE program is in line with a recent Bank evaluation of its policy based-operations 1999-2009. Expected program outcomes include a more efficient, sustainable and transparent use of public fiscal resources, a more conducive climate for entrepreneurs to take risks and to operate job-creating, value-added enterprises, and more opportunities for the poor to take part in and benefit from Mozambique's accelerating development.

1.3 The policy areas and disbursement conditionality of this loan are embedded in the development framework agreed upon between the Government (GoM) and the G19 partners in the Memorandum of Understanding. This policy framework explicitly links loan policies and disbursement conditions to an agreed matrix of indicators and targets, which are reviewed annually. The policy components of this operation as well as all prior actions and tranche disbursement conditions are linked to this framework. The program's conditions also take into account good practice principles on conditionality, and build on the design of the previous successful PRSL loan series.

The program dovetails with the Bank's results-based Country Strategy Paper 2011 -2014 and the Medium-Term Strategy 2008-12 by focusing on strengthening public sector governance and creating an enabling environment for private sector growth, job creation and skills development. The infrastructure pillar of the CSP is also supported through the GPSE, which addresses the creation and implementation of a legal framework for public-private partnerships (PPPs) and opens procurement opportunities to SMEs. Furthermore, the operation is aligned with the Southern Africa Regional Integration Strategy (RISP 2011 -2015), particularly the component focusing on trade facilitation and the pilot one-stop shop border crossing with South Africa. The GPSE is also aligned with the Bank Governance Strategic Directions and Action Plan (GAP 2008-2012) by strengthening country systems for managing public resources with an emphasis on oversight institutions and accountability systems. The loan design builds on wide-ranging consultations undertaken with civil society and the private sector during CSP preparation.

Expected program outcomes include a more efficient and transparent use of public fiscal resources and a more conducive environment for job creation and skill acquisition, all with a view to promote more inclusive growth and accelerated poverty reduction. Program beneficiaries include the entire population, due to the broadness of the reform agenda.

DAVA Emilio Aniceto Fernando - OSGE2

Finance source	Amount
ADF	UAC 60,000,000
Total	UAC 60,000,000