WASHINGTON-(MaraviPost)-The World Bank Board of Executive Directors on Thursday, approved an US$80 million credit to the Malawi government for general budget support.
This is a sign of great relief for the country to have the first budget support financing approved by the World Bank in four years.
The budget support operation, fully referred to as the “Agricultural Support and Fiscal Management Development Policy Operation (DPO),” is the first of a proposed series of two operations.
In a press statement made available to The Maravi Post, the bank says the funds aim to improve incentives for private sector participation in agricultural markets and to strengthen fiscal management through more effective expenditure controls and greater transparency.
Signed by Laura Kullenberg, Country Manager for the World Bank in Malawi, it says the DPO supports a series of policy and institutional reforms that Malawi is undertaking in order to reduce distortions in, and improve the performance of the agricultural sector; and to restore basic public financial management and accountability systems.
The World Bank adds that the DPO, is part of a broader World Bank response to the recent El Nino-induced drought and food security crisis, and brings the total support to recovery and resilience building efforts to US$272.75 million.
The DPO aims to catalyze some of the investment financing operations in the overall response, by addressing some of the key binding constraints that have amplified Malawi’s vulnerability to climate-induced shocks.
Kullenberg observed further that Malawi’s policies and institutions—particularly in the agricultural sector—have often exacerbated the country’s vulnerability.
She added that government has taken initial steps towards addressing vulnerability and this operation is to help boost those efforts.
“Agriculture remains central to the fortunes of Malawi, which makes this DPO a potentially high return operation as it will support an emerging reform agenda, while acting as a stabilizing measure for the economy.
“The Government has taken some very important reform steps and it is critical to maintain momentum, and deepen reforms going forward to move Malawi out of the cycle of vulnerability and onto a positive development path,” Kullenberg said.
Goodall Gondwe, Malawi’s Minister of Finance, Economic Planning and Development underscored appreciation by commending the Bank’s decision.
Minister Gondwe said government was committed to ‘breaking the cycle’ of vulnerability in Malawi, by making the necessary reforms that will lead to a more resilient and private sector-oriented agricultural sector, and by rebuilding integrity in our public financial management systems.“
We are grateful to the World Bank’s vote of confidence in these efforts, demonstrated by the approval of budget support, but we also recognize that there is still a long way to go,” Gondwe said.
The US$80million credit is from the International Development Association, the World Bank’s fund for the poorest nations.