Multi-Million Dollar Deal Marks Resumption of Financial Support of Mozambique by World Bank

While the World Bank and the International Monetary Fund (IMF) signed deals with Mozambique this year, the organizations have previously refrained from providing financial support to the country after a hidden debt scandal in 2016.

A $300 million grant was signed off by the World Bank for Mozambique this week, with the country’s Minister of Finance Max Tonela declaring that the money will go towards financing infrastructure projects and improving living conditions.

"This is the first state budget support funding that we hope to see in the next three years," Tonela said as quoted by AFP during the deal-signing ceremony held in the country’s capital of Maputo.

Idah Pswarayi-Riddihough, the World Bank’s country director for Mozambique, also said that the deal is expected to "support structural reforms" in the nation.

The World Bank deal and a $456 million agreement Mozambique signed with the IMF in May come after the two organizations previously shunned the country in the wake of a hidden debt scandal that erupted several years ago.

In 2013 and 2014, the government of Mozambique contracted some $2 billion worth of secret loans from international banks that were supposed to be used to purchase a tuna-fishing fleet and surveillance vessels, although an independent audit later revealed that $500 million of that money was diverted and remains unaccounted, AFP notes.

While Mozambique’s government initially kept the parliament in the dark regarding the debt, the affair was exposed in 2016, prompting both the World Bank and IMF to suspend financial support for the country until this year.