General Budget Support (GBS) Mozambique 2014-2016
Contribution ID : SE-0-SE-6-51140064This website displays open data about Swedish aid, which shows when, to whom and for what purpose Swedish aid is paid out, as well as what results it has produced. This page contains information about one of the contributions financed with Swedish aid.
The purpose of the intervention is to contribute to the achievement of the objectives of the country's poverty reduction strategy (PARP). PARP is based on the results of the Household Survey 2008/2009, which showed that access to health, education and infrastructure has increased, but that poverty (measured by consumption) had not been reduced to the extent ex...
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- A01 - General budget support
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Total paid amount: USD 00
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The purpose of the intervention is to contribute to the achievement of the objectives of the country's poverty reduction strategy (PARP). PARP is based on the results of the Household Survey 2008/2009, which showed that access to health, education and infrastructure has increased, but that poverty (measured by consumption) had not been reduced to the extent expected, mainly because of low agricultural productivity and weak job creation. PARP’s main objectives are to increase productivity in agriculture, stimulate job creation and promote social development, with improved governance and strengthened systems for public financial management as prerequisites for achieving these goals. PARP formally applies until the end of 2014 and is expected to be extended for one year and then replaced by a new National Development Plan/Poverty Strategy. This was also the approach when PARP replaced the previous poverty reduction strategy (PARPA II). The extension will provide the opportunity to formulate a new strategy based on the results of PARP, which is being evaluated through an ongoing household survey. The modality of the intervention is general budget support (GBS), a non-targeted contribution to the Mozambican state budget, disbursed provided that Mozambique meets the basic pre-requisites laid down in Sida’s guidelines for GBS, implements its poverty reduction strategy and delivers results in relation to an agreed goal and results framework. By using the country’s own systems and strengthening these, and by distributing resources through a budget process in which the country's elected institutions weigh priorities against each other, the intervention is considered to be likely to achieve long-term sustainability of the results. GBS is coordinated with 15 other bilateral and multilateral donors under a common framework for monitoring and dialogue. Together, these contributions make up about 5 % of the funding of the country's national budget. The intervention uses Mozambique's own systems for planning, implementation and monitoring. By contributing with resources that the country's parliament and government themselves administrate, the GBS fills the resource gap between the country´s tax revenues, much of which goes to recurrent spending, and the specific aid projects paying for parts of the investment budget, but which are largely controlled by donors. The modality also strengthens the country's own systems for public financial management and accountability and thereby contributes to the development efforts being institutionalized and sustainable. The preliminary findings of the ongoing evaluation of GBS in Mozambique show that GBS contributed to strong results in the education sector and to the strengthening of public financial management systems in a cost-effective and predictable way, while helping to preserve macroeconomic stability and thus contributing to economic growth. The evaluation also states that available alternatives would have been less cost-effective and would not have strengthened the underlying conditions for delivering results in the same manner. The weaknesses in Mozambique’s own systems and implementation capacity cause internal risks, including fiduciary risks, which are medium to high. These risks have decreased over time and are managed through ongoing reforms, commitment to new reforms, monitoring, dialogue and extensive programs to strengthen the Mozambican state's implementation capacity. Specific so-called complementary measures to manage the risks are agreed separately but are still considered to be part of GBS approach. The external risks are medium to high. The GBS framework in Mozambique provides a unique platform for dialogue on measures to reduce external risks, but these risks can still only be partially addressed through the intervention.
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Result
The below examples of results that have been acheived should be read together with the more thorough conclusion on performance for 2014 and 2015 and the related Perfomance Assessment Framework (the results framework for budget support) for the same years. In 2016 there was a breach of Underlying Principles for budget support because of the discovery of the hidden loans. Budget support was suspended and hence no results attributable to budget support are assumed to have been acheived in 2016. Examples of results acheived On the overall level, the latest poverty data from the household budget survey 2014/2015, as analysed by in the National Poverty Assessment 2016 (MEF) show that 1) the poverty rate has gone down in relative terms from 51.7% (2009) and 46.1% (2014), 2) that the poverty rate during the same period went up in absolute terms, mainly due to high and stagnant fertility rates, and 3) that inequality is high and on the rise: urban vs rural and south vs north and men vs women. The WB analysis from May 2018 confirm these patterns. The link between budget support, development and poverty reduction in Mozambqiue is indirect and complex and is explained more thoroughly in the "Evaluation of Budget Support in Mozambique 2005-2012" from 2014, including comparisions with other countries. On a Performance Assessment Framework level: In 2014 there was a mixed performance related to budget support, where 53% of the indicators were considered to be completely met. Results were achieved mainly related to the objectives for Increased Production and Productivity of Agriculture, and Fisheries and Human and Social Development, and a partial implementation of the Action Plan for Fiscal Transparency. For Agricultural Production and productivity: all PAF targets were met. The growth of the agriculture sector was significant and with fewer differences between the growth of the business and the smallholder sectors than in 2013. There was also progress in improving the business environment, with a rise observed on the Doing Business ranking. For Human and Social Development: The student/teacher ratio in primary education decreased and the ratio of health workers per 100,000 inhabitants rose. There was also an increase in school enrolment rate for six year olds. See "Conclusion on Performance for 2014" for more detailed information. In 2015 the performance was mixed with a negative trend from previous years where 41% of the indicators were considered to be completely met (13 out of 32 indicators). Satisfactory results were accomplished in Human and Social Development. There was an expansion of service delivery and for all indicators - except student/teacher ratio, social protection and urban sanitation - targets were exceeded. The ratio of health workers per 100,000 inhabitants rose. See "Conclusion on Performance for 2015" for more detailed information. Apart from the funding itself the dialogue and follow-up of important development reforms and issues is one of the built in strenghts of the budget support modality. In early 2016 the Performance Assessment Framework for GBS was revised, as a result of a GBS reform which the Embassy was spearheading under its chairmanship in G14 during 2014-2015. This resulted in a much stonger focus on reforms and issues that were closer to the responsibilities and mandate of the Ministery of Economy and Finance such as Public Financial Management (see PAF, Area 1 "National Systems"). Monitorable indicators and policy actions were developed and agreed with GoM related to budget planning and execution, public investment management, fiscal transparency and fiscal risk management, tax revenues, public procurement and, internal and external audit. After the budget support modality was suspended most of these PFM reforms, issues, indicators and policy actions became part of MEFs PFM strategy 2016-2019 and have continued to be the main basis for the joint dialogue between development partners (and the IMF) and the Ministry of Economy and Finance, in high-level (HoMs-Minister of Finance) meetings as well as in technical level (PFM Working Group-Permanent Secretary of MEF) meetings, as well as in related sub-working groups for example related to tax and audit issues. The PFM group is chaired by the Embassy and co-chaired by the IMF since 2017.
The intervention supports the implementation of Mozambique’s national development plan. The present plan, the PARP, which is in place until December 2015, has as its overall objective “to reduce consumption poverty from 54.7 to 42% by 2015”. This objective will be updated, based on the new government’s priorities for the next five years as well as new poverty data from the on-going household survey. The new five-year program,recently approved by parliament, provides an indication of continued focus on critical development. Its overall objective is “ to improve the living conditions of he Mozambican people, increasing jobs, productivity and competitiveness and creating wealth with inclusive development, in an environment of peace and security”.
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