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World Bank loans Malawi K34bn towards Masaf 4

Done deal: Gondwe (2nd L) and Kullenberg (middle) signing the Masaf Loan agreement
Done deal: Gondwe (2nd L) and Kullenberg (middle) signing the Masaf Loan agreement

Global multilateral development bank, World Bank, on Wednesday could not commit itself towards resuming direct budget support to Malawi for the 2014/15 National Budget.

However, the bank’s country manager for Malawi Laura Kullenberg has stated that the Bretton Woods institution is still discussing with the Malawi government over possibility of budget support resumption in the context of the Common Approach to Budgetary Support (Cabs) grouping.

“We are still looking at budget support and we are discussing with the government in the context of Cabs. So, that is still under discussion,” said Kullenberg who did not indicate whether World Bank will provide direct budget towards the 2014/15 National Budget throughout the interview with The Nation.

She was speaking at Capital Hill in Lilongwe on the sidelines of signing loan agreements for two projects, namely the Malawi Social Action Fund (Masaf 4) and the Skills Development Projects worth a combined $83.8 million (approximately K34 billion).

World Bank, alongside other major donors under Cabs, are still withholding budget support for Malawi and collectively announced such a decision on November 7, last year in Lilongwe, angered by revelations of massive looting of public funds at Capital Hill christened Cashgate.

Other Cabs group members who provide harmonised budget support include DfID, the European Union (EU), Norway, and the AfDB, with the IMF, UNDP, Ireland and Germany having the status of ‘observers’.

But, so far, only the Tunisia-based AfDB has earmarked $15 million (about K6 billion) towards the 2014/15 National Budget.

Quizzed on any expected flicker of hope for Malawi over budget support resumption by World Bank in the coming fiscal year in the context of on-going discussions, Kullenberg just said: “We are very excited that this administration has invested heavily in public finance management and also the emphasis on public sector reform, both of them are very interesting and important.”

Currently, although Malawi has made significant progress in its discussions on Extended Credit Facility (ECF) with the IMF—which often signals a green light to other donors to unlock their budget aid—donor support through the budget remains suspended.

But Kullenberg said the World Bank is working closely with the government to implement policies that will ensure macroeconomic stability, adding that there are a number of challenges facing the economy that need collective efforts.

She could not, however, cite specific challenges facing the domestic economy.

Commenting on the fourth generation of Masaf project, Kullenberg said the World Bank expects that the programme should aim to strengthen Malawi’s social safety net delivery system.

She said the fund has already provided work opportunities for about 1.6 million people, helping them to earn wages and achieve greater food security.

On skills development project, Kullenberg said the bank believes that young people in Malawi need to be able to find jobs that release them from poverty, ‘and they cannot do so without right skills.’

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