The World Bank says it is ready to provide 2019/20 budget support if Treasury tightens the grip on expenditure controls to show prudence and fiscal discipline.
World Bank country manager Greg Toulmin said in an interview on Friday in Lilongwe that the bank is keen on supporting the government to achieve economic growth by addressing impediments to the realisation of the growth path.
He said: “We have been discussing with the Minister of Finance and I told him what will be the basis for us to provide budget support, I hope he should be able to explain to you. In terms of growth, Malawi needs interventions geared at more tax collection, leading to having more revenue for government operations.
“On our part, we are very keen to have a conversation with government around constraints to growth and one of which is the energy sector, to ensure the country has access to consistent and reliable energy which can create room for expansion of businesses.
“Similarly, we are also looking at the reliable Information and Communication Technology [ICT] and helping to expand the commercialisation of agriculture along with a number of components that should come together.”
In an interview on Friday, Minister of Finance, Economic Planning and Development Joseph Mwanamvekha confirmed meeting the World Bank and other development partners to seek budget support as part of a resource mobilisation initiative in preparation for the 2019/20 National Budget.
He said: “The World Bank is looking at reforms in terms of financial prudence and monitoring the parastatals’ performance, strengthening financial governance and prudent use of resources at all levels of the government, including parastatals.”
Mwanamvekha said the World Bank wants Treasury to pay a closer look at financial governance which includes prudence in procurement processes, adding that Treasury is already working on the benchmarks and is positive to get budget support.
Economics Association of Malawi president Chikumbutso Kalilombe last week said Treasury needed to exercise prudence at all cost if the economy is to sustain the existing stability gains and register growth.
Similarly, Parliamentary Budget and Finance Committee chairperson Sosten Gwengwe urged Treasury to consider strong austerity measures to ensure that there is no fiscal slippage.
During the last financial year, the World Bank rescinded its pledge to disburse K60 billion in budgetary support to Malawi, a development that forced Treasury to trim its planned expenditure.
Among other reasons, the bank cited failure by Cabinet to discuss proposed Agricultural Development and Marketing Corporation (Admarc) reforms that would help to turn it around to become profitable.
It was envisaged the budgetary support could have gone a long way in reducing the domestic debt which has now reached K1.7 trillion or 32.3 percent of gross domestic product (GDP) as at December 2018.