The African Development Bank (AfDB) has confirmed the possibility of providing budgetary support to Malawi in this financial year, a move that has excited Treasury.
The AfDB move follows positive indication from the International Monetary Fund (IMF) that the country’s economy is on track.
AfDB acting director general for Southern African Region Development and Business Delivery Service Josephine Ngure confirmed on Monday in Lilongwe on the sidelines of the loan and grant signing agreements with the Malawi Government that the pan-African bank and Treasury have been discussing the issue.
She said AfDB has been waiting for a positive signal from IMF and that a high-level team will be visiting the country in two weeks’ time to discuss the issue further along with other development support possibilities.
Ngure said AfDB is encouraged by the progress that has been reported on the IMF programme.
She said: “The fact that we have positive reports coming out of the discussions with the IMF is encouraging for us.
“We have beyond the IMF programme other criteria we look at internally when we are processing budgetary support operation. Those are the things we will be reviewing when our high- level mission arrives in the country,” she said.
Minister of Finance, Economic Planning and Development Joseph Mwanamvekha, in an interview, confirmed that he recently met and discussed with the bank’s president on the budget support issue.
He said stabilisation budgetary support from the IMF has injected a positive signal from cooperating partners, including AfDB.
He said: “Through the IMF approval, we have shown to the world that we are managing our resources prudently. We are making sure that there is value for money to benefit citizens; hence, we expect the budget support will be provided.”
University of Malawi’s Polytechnic economics lecturer Betchani Tcherereni on Tuesday explained that budgetary support resumption means donor confidence is being restored, but challenged government to do more.
“In Malawi, we have been having problems to raise enough resources for the developmental budget.
“So, when money like this is coming, it is going to ease the pressure on the budget deficits. From an economic point of view, when the budget deficit is going down, macroeconomic fundamentals tend to improve in the country,” he said.
In 2013, donors stopped direct budget support to Malawi after the exposure of looting of taxpayer’s money dubbed Cashgate in which civil servants and businesspersons connived to loot about K24 billion through Integrated Financial Management Information System (Ifmis).