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General budget support 1994-2004: evaluation report
May 2006
Richard Batley, Liv Bjørnestad, Amelia Cumbi

Acknowledgements: FANRPAN acknowledges the OECD website as the source of this report: www.oecd.org


Background: Recovering from Civil War

From the beginning of the liberation war in 1964, Mozambicans experienced nearly 30 years of violent strife, social and political disruption, and economic crisis. Under pressure of civil war, the infrastructure of governance disintegrated. In large parts of rural Mozambique, schools and health posts were destroyed and teachers and nurses evacuated. Around 37% of the population lost their homes, were displaced or became refugees. Since the peace settlement in 1992, there has been almost uninterrupted growth of around 8% per annum. This has reduced the level of absolute poverty from 69% of the population in 1996–97 to 54% in 2002–03.

However, high rates of poverty, poor health indicators and high illiteracy rates persist. Mozambique’s recovery was strongly supported by aid from bilateral and multilateral agencies. Official aid disbursements averaged about USD 1 billion a year from 1992–2004 (about 30% of Gross National Income).

The Evolution of PGBS in Mozambique

In the late 1990s, some longstanding bilateral donors saw a need for innovative and more coordinated support. Liberalisation of the economy and debt relief under the Heavily Indebted Poor Countries (HIPC) initiative made traditional forms of import support and balance of payments aid less relevant. Between 1996–2000 there was a trend towards pooling of aid at sector level, but there was still concern that ‘off-budget’ aid – via individual projects or sector basket funds – seemed to undermine government systems and capacity.

Spurred by the HIPC initiative, Mozambique prepared a Poverty Reduction Strategy Paper (PRSP, known by its Portuguese acronym PARPA) in 2001; this provided a national strategy on which donors could align their aid. Coordination of PGBS was agreed in 1999 and formalised in 2000 as a “common framework agreement” in a Joint Donor Programme for Macro-Financial Support between the government and bilateral donors. An original group of six donors rapidly expanded to 10 in 2002, 15 in 2004 and 17 (the “G17”) in 2005. The agreement required the government to prioritise poverty reduction according to the PRSP. While PGBS was the focus of the agreement, it also embraced other forms of programme aid, specifically sector support.

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