AfDB’s K10bn grant to mitigate devaluation impact
Malawi Government says it plans to use the $40 million (K10 billion) grant from the African Development Bank (AfDB) to implement programmes aimed at mitigating the negative impacts of the 49 percent devaluation of the kwacha.
The Malawian Government has undertaken bold measures to boost the economy, including devaluing the kwacha and adopting a floating exchange rate regime in May 2012.
The devaluation triggered the upward price adjustments of 30 percent in petroleum products, 63 percent in electricity tariffs, eroding the purchasing power of consumers and magnified social hardships among the population.
Finance Minister Dr. Ken Lipenga said on Monday the restoration of Fiscal Stability and Social Protection (RFSSP) is AfDB’s response to government’s request for support from development partners to help mitigate some of the impacts of these actions.
“That grant is budget support; it will enable government to provide services provided for in the 2012/13 fiscal budget. We intend to upscale social cash transfers, public works and other things, particularly in view of the devaluation.
“We talked a lot with our development partners to support us after the devaluation of the kwacha and a lot of them pledged direct support. Soon we will be signing an agreement with World Bank for another grant,” said Lipenga.
