Malawi donors meeting in Lilongwe

Malawi’s key donors under the Common Approach to Budget Support (Cabs) are meeting in the capital Lilongwe to jointly undertake a first 2012/13 fiscal year review with the Malawi Government.

This Tuesday’s meeting comes at a time when Malawi is at the height of implementing a package of economic reforms by the Joyce Banda administration which many argue have unleashed unintended consequences such as the prevailing high cost of living.

The Cabs meeting also comes when most donors under the group have not yet released their budget support to Malawi, a situation feared to likely worsen the scarcity of foreign currency as donor funds is the second major source of foreign cash for Malawi after tobacco.

Malawi receives a harmonised general budget support from a group of donors which consists United Kingdom (UK), Norway, the African Development Bank (AfDB), the European Union (EU), the World Bank and Germany.

The International Monetary Fund (IMF) and United Nations Development Programme (UNDP) participate as private observers.

Currently, it is only the AfDB and the World Bank who have released their budget support to Malawi.

Finance Minister Dr. Ken Lipenga said this week in an e-mail response that he is optimistic about the meeting which, he said, will offer him a platform to highlight before the donors all political and economic reforms that Malawi has recently achieved.

Most likely, donors will take their time to pin government on the general outcry by concerned Malawians over public purse over-expenditure by the ruling administration as seen by “rampant” external travel by President Joyce Banda.

The revision of most macroeconomic targets such as year-on-year inflation rate and gross domestic product (GDP) at this meeting cannot be ruled out on account of the current hostile environment characterised by high interest rates and the wrath of the devaluation of the kwacha which has triggered a spate of labour unrests across Malawi.

A 2012/13 budget envisages an 18.4 percent average annual inflation rate and a real GDP growth rate of 4.3 percent, one of the lowest growth rates Malawi has attained in the last decade.

Lipenga said the meeting will allow stakeholders, including Malawi’s donors, to review indicators related to macro-economic management, public financial management, human rights, and the targets for individual sectors, including agriculture, health and education.

The donors, senior government officials and all relevant stakeholders are meeting at a critical time when President Joyce Banda has assured international development partners that her government is committed to address economic and other governance concerns raised by developing partners earlier.

After President Banda’s ascendancy in April, there have been subsequent strong signals provided by the President on the need for economic and governance reforms, which received strong and positive support from bilateral and multilateral development partners.