Under the previous MoU the Government received a total of $1500 million in budget support from the group. Given the scale of funds involved, an informed process, that meets the needs of all twenty signatories, Government and donors, is required to manage the engagement. This process is outlined in the Memorandum of Understanding. The last MoU was signed in April 2004 and expires in April 2009, while the MoU signed on March 18 will run for a period of five years, to 2014.
The MoU is a wide-ranging agreement on the terms under which the cooperation in support of the Mozambican strategy for national development and poverty reduction (PARPA II) operates. The group of nineteen development partners, known locally as the G19 (and in the MoU as the Programme Aid Partners, or PAPs), is comprised of the African Development Bank, Austria, Belgium, Canada, Denmark, the European Commission, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, the United Kingdom and the World Bank. The MoU’s expiry date in 2014 has a special relevance, given that only a year later both Mozambique and its development partners will be called on to report on progress against the Millennium Development Goals, in relation to which all nations undertook a halving of poverty between 1995 and 2015.
The MoU carries a solemn commitment by the signatory parties to implement its provisions in full, as well as obligations for both sides. For example, the Government commits itself to continued poverty reduction and to adherence to fundamental principles of democracy and respect for human rights. The PAP's pledge to hold themselves annually to account against the terms and commitments in the MoU, a form of mutual accountability prioritised in the Accra development conference last September. Under the MoU there will continue to be an Annual Review of Government and partner performance and equally an annual meeting to set the benchmarks against which the Government and partners will be measured in the following year (the Mid-Year Review), for instance as regards the mutual commitments on improving governance and combating corruption.
This new MoU was developed to capture the changes and improvements in commitments, relationships and work methods since the first one was drawn up in 2004. In the view of its signatories, this MoU does represent a major evolution from its predecessors. They see it as representing a best balance between the promotion of ownership of the management by the Government of Mozambique of budget support finance, and the oversight needed by the nineteen partners for the provision of their taxpayers’ and agencies’ funds.
The MoU in particular provides the Government with a measure of financial predictability. The PAPs will give three-year predictions of their budget support allocations (and other support), by end-February each year, nearly one year in advance of the actual transfer. This provides the Government with the information needed for elaborating the Plano Económico e Social and the Orçamento do Estado. It also gives an added measure of financial transparency to discussions in Parliament and with civil society, on the application of the Government’s financial resources. In the new MoU, for the first time the partners also make commitments as regards aligning all their modalities of support with Government systems.
The re-commitment to providing budget support for another five years is a reflection of an acceptance by both sides of the enduring quality of their partnership and their shared commitment to the Mozambique’s economic and social development, to the continuing reduction of absolute poverty and to the achievement by Mozambique of the Millennium Development Goals.