Mozambique: US$ 88 million to finance Action Plan for the Reduction of Absolute Poverty II

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Tunis, 27 October 2006 – The Board of Directors of the African Development Fund (ADF), the concessional window of the African Development Bank Group (AfDB) on Friday in Tunis, approved a loan of 60 million Units of Account, about US$ 88 million, to finance through Action Plan for the Reduction of Absolute Poverty II (PARPA II), to reduce poverty headcount from 54% to 45% between 2005 and 2009.

The ADF’s proposed loan will deepen the Bank Group’s support for the Government’s reform agenda in: (i) ensuring sound macroeconomic management whilst strengthening public financial management; (ii) improving the quality of public services delivered to citizens, and; (iii) undertaking legal and justice reform including private sector development. In this, the PRSL (Poverty Reduction Support Loan) will help implement the PARPA II. The PRSL constitutes an operation to align the policy agenda supported by the Bank Group and other donors with the national priorities as articulated in the PARPA II.

In medium term it will promote human well being and economic development through rapid, inclusive and broad-based growth.

During the next four years the Government envisages carrying out the second ‘wave’ of institutional reforms whilst providing the country with suitable economic and social infrastructure to address the main bottlenecks to private sector development.

The operation has been designed as a UA 60 million two tranche operation. The first tranche is for the national budget year 2006, expected to be released in December 2006, and the second tranche is for the budget year 2007, expected to be released in May 2007. The operation fills an identified financial gap (within the PARPA II, and Medium Term Fiscal Framework (MTFF)).

The ADB Group operations in Mozambique started in 1970. To date, its commitments in the country stand at US$ 1.3 billion in 93 operations.

Project Brief

  • Name of the project: Poverty Reduction Support Loan
  • Executing Agency: Ministry of Finance
  • Total cost: UA 498,7 millions
  • Sources of finance:

    • ADF   UA 60 million
    • DFID  UA 89.5 million
    • IDA  UA 89.1 million
    • European Union   UA 75.6 million
    • Sweden   UA 46.7 million
    • Netherlands   UA 30.9 million
    • Norway  UA 21.4 million
    • Germany  UA 17.2 million
    • Denmark  UA 13.7 million
    • Ireland  UA 13.0 million
    • Finland UA 8.6 million
    • Switzerland  UA 7.2 million 
    • Italy  UA 6.1 million
    • Belgium  UA 5.2 million
    • Spain  UA5.2 million
    • France  UA.3 million
    • Canada  UA 3.0 million

* 1 UA = USD 1.47637 = MZM 38.1649 as at 27/10/2006

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