Mozambique: World Bank financing cut threatens to worsen indicators

11:24 CAT | 28 Sep 2017

The Economist Intelligence Unit (EIU) says today that the reduction of the World Bank’s financing of the Mozambican budget “paradoxically threatens to worsen the performance of the country in the various indicators” that make up the annual assessment of this institution.

“Like many other donors, the World Bank suspended budget support in May 2016 following the revelations about hidden debt, and there is little prospect of resuming short-term aid,” write the experts from the analysis unit of the British magazine ‘The Economist’.

In an analysis of the 0.3 percentage point drop in the Bank’s assessment in the Country and Policy Institutional Assessment (CPIA) to which Lusa has access, analysts write that “paradoxically, this threatens to worsen even more the performance of Mozambique in the various CPIA indicators”.

The explanation for the predictable slide in the indicators is that “it was the technical assistance provided by budget donors that supported institutional capacity and good policies prior to 2013”, the year from which indicators began to worsen.

The Economist analysts warn that international aid must still be delayed because “the government has not yet complied with donors’ requirements for full transparency on suspicious debt”, which is seen as essential by institutions such as the International Monetary Fund and G14 group of fourteen countries that have provided technical and financial assistance to Mozambique.

The World Bank lowered its annual institutional assessment of Mozambique’s economic policies for 2016 last week in an analysis where public debt management attracted the lowest rating.

The assessment saw Mozambique fall from 3.5 to 3.2 points, still 0.1 points above the sub-Saharan Africa average despite the decline in the 16 CPIA indicators relative to 2016.

Also Read: Mozambique dropped 0.3 points in the World Bank’s institutional assessment

The country and policy institutional assessment is made annually by the World Bank and draws on four broad lines of evaluation: economic management, structural policies, social inclusion and equity policies, and public sector management and institutions.

“The latest World Bank assessment is an alarming indicator of the magnitude of institutional capacity deterioration and policy correction in Mozambique,” the analysts write, adding that the Mozambican score (3.2 points) “is comparable only to that of Sudan South, plunged into civil war, and worse than any other African country”.