Mozambique - Country Partnership Framework for FY26-31 - Annex 3 - Risks to CPF Implementation and their Mitigation

Jul 19, 2026

Uploaded by Riley

Annex 3 outlines key risks to CPF implementation in Mozambique and describes targeted mitigation approaches across political, macroeconomic, institutional, fiduciary, environmental, and stakeholder dimensions. It addresses election-period disruption risks, ongoing insecurity in northern and central provinces, elevated debt distress and FX shortages, and weak implementation capacity that can create overreliance on consultants. It further covers procurement, accounting, internal audit, e-SISTAFE/e-GP system gaps, audit quality concerns, and capacity constraints. Environmental and social risks are managed through an strengthened ESRM framework, social risk integration, and improved stakeholder engagement and grievance mechanisms.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages2

Reading Time5 min

AccessFree to download

Risks to CPF Implementation

Political and Governance

Macroeconomic

Institutional Capacity for Implementation and Sustainability

Fiduciary

Environmental and Social

Stakeholders

Public Disclosure Authorized Public Disclosure Authorized Annex 3 – Risks to CPF Implementation and their Mitigation | Risk Category Rating Description (If H or S) | | | | --- | --- | --- | | 1. Political and Governance | S | CPF implementation may face delay risks during sensitive periods such as the 2028 and 2029 election periods; Planning and sequencing activities to avoid interruptions during those periods, including avoiding those that require highlevel approvals, reinforcing transparency, asset-use protocols, and maintaining inclusive engagement can help mitigate this risk and sustain reform momentum as well as safeguard credibility.
Insecurity and instability from the insurgency in northern Mozambique continue to affect the three northern provinces of Niassa, Nampula, and Cabo Delgado, while violence by communal militias has also been recorded in the central provinces, including Zambezia. Dynamic monitoring of risks and trendson the ground, security risk assessments and management plans, and a mediumlonger term approach to mitigating fragility and conflict risks will help to ensure projects can continue to implement without disruption. Continuity is also important for sustained engagement with communities and key stakeholders. | | 2. Macroeconomic | H | Macro-fiscal pressures have increased considerably in recent years. Mozambique is at a high risk of debt distress, with limited public resources to finance critical social and infrastructure spending. The 2022 salary scale reform hiked the wage bill (now among the highest in the world), endangering fiscal sustainability through the accumulation of expensive domestic debt and spending arrears (including on domestic and external debt service) . Sovereign local currency debt is classified at ‘selective default’ by credit rating agencies. Fiscal pressures, coupled with foreign exchange shortages, threaten macroeconomic stability. In turn, macroeconomic instability could provoke social unrest. The economic outlook is heavily dependent on the future of LNG investments. As a mitigating factor, the World Bank and the IMF have been engaging in policy discussions with the Government and providing technical assistance to help secure macroeconomic stability. Addressing this risk is a key pillar of the CPF. | | 3. Sector Strategies and Policies | M | | | 4. Technical Design | M | | | 5. Institutional Capacity for Implementation and Sustainability | S | Institutional capacity to implement projects is weak and prone to substantive delays. This has led to cases overreliance in consultants (PIUs) for managing Bank-financed projects, with a risk to sustainability. WBG and Ministry of Finance have already agreed on a harmonized salary scale PIU consultants, and already embarking on a PIU benchmark assessment which will be used to guide on best project implementation arrangement that will help ensure better implementation and sustainability of interventions. | | 6. Fiduciary | S | As the World Bank moves toward greater reliance on country systems, several critical risks persist. These include: (i) procurement delays including budget execution reporting; (ii) a shortage of qualified and experienced public sector accountants and procurement officers; (iii) weak internal audit functions within the public sector; (iv) gaps in the government’s Integrated Financial Management Information System, e-SISTAFE, including instances of funds flow fraud and absence of eGP system; and (v) quality concerns and delays in | 16 Official Use Only | | | audits conducted by the Supreme Audit Institution, the Administrative Tribunal;(v) weak capacity in the Procurement Oversight Unit(UFSA) .
Mitigation measures include: (i) fiduciary intuitional assessment; (ii) establishing a statutory deadline for quarterly budget execution reports; (iii) scaling up capacity-building initiatives to increase the pool of qualified public sector professionals; (iv) strengthening internal audit and procuremen

FAQs

What political and governance risks could affect CPF implementation?

CPF implementation may face delays during sensitive election periods. Insecurity from the insurgency in northern Mozambique and violence involving communal militias can disrupt project continuity and engagement.

How does the annex address macroeconomic risks?

It highlights increased macro-fiscal pressures, elevated debt distress, wage bill pressures, foreign exchange shortages, and the risk of social unrest. Policy discussions and technical assistance from the World Bank and IMF are cited as mitigation support.

What fiduciary risks are identified and what mitigation measures are proposed?

Risks include procurement delays, shortages of qualified accounting and procurement staff, weak internal audit functions, gaps in e-SISTAFE (including fraud and absence of eGP), and audit quality concerns. Mitigation includes fiduciary assessments, statutory reporting deadlines, capacity building, strengthening audit and procurement functions, system reviews, and faster deployment of the e-GP system.

Jul 19, 2026

Uploaded by Riley