The African Development Bank (AfDB) has given Malawi $29 million (about K13 billion) as sector budget support for the protection of basic social services in the country.
Minister of Finance, Economic Planning and Development Goodall Gondwe said yesterday at the signing ceremony in Lilongwe that this is part of the pledge by the pan-African bank group to provide sector budget support to Malawi following a meeting the minister had with outgoing president of the bank, Donald Kaberuka, last year.
He said the money will go to the health, education and social protection sectors.
“The resources in the health sector will be used for the procurement of essential drugs and medical equipment for the provision of rural-based health services as well as supporting implementation of service level agreements with Christian Health Association of Malawi [Cham].”
The provision of the funds comes after Gondwe said in the proposed 2015/16 national budget that it is unlikely that the country’s bilateral donors will ever resume budgetary assistance regardless of the improvements that government will make in the management of public finances.
The minister, however, said they are hopeful that two other multilateral institutions, namely The World Bank and European Union (EU) will soon decide to join AfDB.
“We understand that, as a matter of policy, these countries have or are in the process of withdrawing budgetary support in other countries worldwide as well. This reflects a policy shift among most bilateral donors in favour of delivering aid through off-budget support. The so-called Cashgate scandal only made things worse for Malawi in this regard,” he said.
Gondwe said Malawi Government needs to restructure its fiscal framework without expecting the budgetary support “that we have been accustomed to receiving from abroad since independence”.
According to AfDB, in the education sector, the funds will be used for the purchase of teaching and learning materials to help government in rolling out new secondary curriculum.
The funds will also be used to purchase school equipment and supplies for science laboratories and technical college workshops.
Under social protection, the support will be provided for the strengthening of targeting and coordination mechanisms through the introduction of a unified registry for all the safety net programmes that the government is implementing.
AfDB resident representative Andrew Mwaba said Malawi has had a difficult financial year 2014/15 and the fiscal situation was challenging even before the January 2015 floods, which devastated crops and displaced thousands of people.
Said Mwaba: “We have noted that government is making efforts to finance the budget and meet these fiscal challenges from its resources, but has still expressed the need for financial support from development partners to ensure that the vulnerable groups are not excluded from accessing basic services especially in health and education.”
While commending government for enhancing domestic revenue mobilisation, Mwaba said the facility signed yesterday, is the bank’s response to the government’s call for support from its partners, saying Malawi will in the interim continue to need financial support of its development partners in various forms as a bridge towards financing its activities.