MAPUTO - Mozambique's total debt fell by 22 percent to $5.2 billion at the end of August 2007 compared to the same period last year, deputy Finance Minister Pedro Couto said on Tuesday.

Of the $5.2 billion, the country's foreign debt stood at $3.3 billion mainly owed to countries from the eastern bloc, Couto said.

He said the fall in the debt was mainly due to government efforts to cut back on its expenditure and rely more on grants rather than borrowing.

Mozambique is one of the world's poorest countries, with about 70 percent of its population living in poverty.

"The debt that Mozambique has as of now is concessional debt, and foreign assistance is doing very well in debt reduction while we are also raising domestic revenues to reduce it," Couto told Reuters.

Couto said debt relief would improve the country's social benefits and help the government increase spending on development projects.

He cited donations by some international creditors such as the World Bank, which, via the International Development Agency (IDA), gave over $60.7 million within the scope of the Programme for Reduction of Absolute Poverty.

The IDA also gave a further $49.9 million, with $29.3 million for road and bridge reconstruction, improving higher education and electricity supply to urban and rural areas and $20.6 million for restructuring ports, railways and urban sanitation, he said.

Mozambique has been pursuing a wide-ranging program of economic stabilization and structural reform, which has reaped impressive results.

Market liberalization, privatization, fiscal reform, and other public sector reforms have led to strong economic growth, averaging more than 8 percent per year over the past five years in the country formerly torn by civil war.

In addition, the government has made notable progress in expanding the delivery of health, education, and water services, as well as in expanding the country's road network.