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General budget support program (support to PARPA)

Technical brief

Financing	Agence Française de Développement
Beneficiary	Republic of Mozambique
Grant amounts	2007-2009 : € 6.0 M 2005-2006 : € 6.0 M 2003-2004 : € 6.0 M 2002 : € 1.5 M Total : € 19.5 M (on resources of debt reduction and development contract signed between France and Mozambique)
Project duration	2002 to 2009

Objective

The multi-donor general budget support program is a basket fund which aims at supporting the national poverty reduction strategy plan (PARPA, Action Plan for the Reduction of Absolute Poverty) which is Mozambique’s PRSP (Poverty Reduction Strategy Paper).

The program constitutes a harmonized mechanism of dialogue on public policies with Mozambican authorities and a tool to support and monitor reforms.

Project content

As early as 2002 France, via general budget support financed by the Debt Reduction and Development Contract (C2D), was able to be part of the harmonised general budget support mechanism launched in 2001, mainly at the instigation of the European Commission, the United Kingdom and Nordic countries. After an initial €1.5M contribution in 2002, France raised its commitment to this program to €3M per annum, with two successive budget support financings for the period 2003-2004, then 2005-2006.

In 2007 the general budget support mechanism gathered 19 donors (G19) and accounted for over 80% of aid flows to Mozambique. It is based on a Memorandum of Understanding, a mutual commitments framework between donors (defined in the mechanism as “Programme Aid Partners” or “PAPs”) and Mozambique and provides for a government performance assessment mechanism backed to PARPA and a PAP performance assessment matrix following the Paris Declaration on Aid Effectiveness (harmonization, predictability of aid, alignment on national procedures). A new MoU was signed in March 2009 which covers 2009-2014.

These performance assessments are carried out during joint annual reviews. April’s joint review focuses on the assessment of actions undertaken by Mozambique’s government during the previous year, while September’s joint review focuses on updating performance matrix indicators for the year to come.

Dialogue between the Government and the PAPs is based on four main cornerstones and 24 thematic and sector-wide working groups aligned on PARPA II pillars (period 2006-2009).

The four cornerstones are:

poverty and macroeconomic management,
governance,
economic development,
human capital.

Amount of general budget support

France committed to €2M of general budget support per annum for three years (2007-2009), financed on C2D.

The table below summarizes general budget support provided since 2002:

Agreement N°	Date of approval	Date of agreement signature	Budget years	Annual amounts in millions of euros
CMZ 1062	15/11/2001	22/02/2002	2002	1,5
CMZ 3002	28/11/2002	09/01/2003	2003-2004	3,0
CMZ 6008	01/07/2004	12/01/2005	2005-2006	3,0
CMZ 3006	29/06/2006	23/04/2007	2007-2009	2,0

Expected outcomes

The strategic objective of PARPA II is to reduce poverty from 54% in 2005 to 45% in 2009.

* Download the project presentation in English, French and Portuguese