At present the Government of Mozambique receives about 450-500 million USD a year in direct budget support from 19 development partners (G-19), also called Programme Aid Partners, where 16 are bilateral countries and 3 are multilateral institutions. Norway provides about 160 million NOK a year in direct budget support to Mozambique. The current bilateral agreement is the fifth agreement between the Government of Mozambique and Norway on direct budget support. The current agreement was signed in 2006 and runs until 2009 with a total amount of 500 million NOK. Direct budget support is closely linked to the implementation of the Poverty Reduction Strategy, in Mozambique called PARPA II.
The direct budget support is provided in close collaboration within the G-19 partners. These are: Germany, the World Bank, Belgium, the European Commission, Denmark, United Kingdom, Italy, Finland, France, Ireland, Norway, Netherlands, Portugal, Sweden, Switzerland, Canada, Spain, AfDB and Austria. The guiding principles for this collaboration, on one hand, among the development partners and, on the other hand, between the partners and the Government of Mozambique, are defined in a Memorandum of Understanding. A new MoU was signed on March 18, 2009.
The G-19 is lead by a Troika. The three members of the Troika are mandated to carry out the dialogue with the Government of Mozambique on behalf of the partners. The Troika chairmanship includes coordination and information sharing among the G-19, with an emphasis on performance assessment and monitoring. Norway chaired the Troika in 2007-2008. The overall objective of the direct budget support is to contribute to poverty reduction in all its dimensions by supporting the evolution and implementation of the Plano da Acção para a Redução da Pobreza Absoluta (PARPA, equivalent to Poverty Reduction Strategy Programme - PRSP) by:
- Building a partnership based on frank and open dialogue on the content and progress of Mozambique’s poverty reduction strategy as set out in the PARPA and made operational through the Medium Term Fiscal Framework/Cenário Fiscal de Médio Prazo (CFMP), the Economic and Social Plan/Plano Económico e Social (PES) (including priority indicators and targets as defined in the Performance Assessment framework - PAF) and State Budget/Orçamento do Estado (OE).
- Providing financing to the public sector for poverty reduction, clearly and transparently linked to performance, in a way which improves aid effectiveness and country ownership of the development process, reduces transaction costs, allows allocative efficiency in public spending, predictability of aid flows, increases the effectiveness of the state and public administration, improves monitoring and evaluation and strengthens domestic accountability.
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