The coming 2020/21 National Budget calls for hard choices and trade-offs as well as credible revenue projections and sustainable expenditure targets by the newly-ushered Tonse Alliance administration, the World Bank has said.
Speaking on Friday during the virtual launch of 11th edition of the Malawi Economic Monitor (MEM) in Lilongwe, new World Bank country manager Hugh Riddell said it was imperative for the new government to re-build fiscal buffers and reduce reliance on expensive domestic debt and arrears.
“In turn, this will restore business confidence, and strengthen the government’s ability to deliver its agenda,” said Riddell, who has replaced the retiring Greg Toulmin.
Riddell explained that the bank is so far encouraged by early signals to strengthen the oversight and transparency of State-Owned Enterprises (SOEs), stressing that governance reforms of this kind ensure scarce public resources are effectively and efficiently deployed.
But he stated that longer term economic transformation requires diversification and commercialisation of agricultural markets, while ensuring resilience for the vulnerable.
The new World Bank chief said with Covid-19, the key challenge for many countries including Malawi is the balance between immediate response—to save lives and livelihoods—and the need to protect future recovery based on prudent fiscal management.
In the publication, the MEM proposes a three-part framework for the key policy objectives and these are protecting lives, livelihoods and the future.
On protecting lives, the bank urges government to continue its “smart containment” measures with a focus on disease prevention, detection, and treatment. On protecting livelihoods, the bank advises government to expand social cash transfers to the most-needy, including in urban areas while also ensuring that trade and markets remain open so that farmers can access inputs as well as export markets.