African Bank give Malawi US$40m budget support grant

The African Development Bank (AFBD) has on Friday given Malawi a budget support grant of US$40 million (MK11 billion) which will promote accountability in the public finance management systems, enhance social protection and restore fiscal stability.

Signing the agreement with the Bank on behalf of the Malawi Government, Minister of Finance, Dr. Ken Lipenga said for Malawi to get the economy back on track, there was need for support from development partners.

Lipenga said the country needed injection of resources into the economy to support recent microeconomic reforms.

Lipenga: Blessed year


The minister then cited the grant by the bank as timely, as it has been provided in the same context of a crisis response general budget support to mitigate the adverse impacts of the bold and necessary adjustment measures taken by the current government.

“The funds provided will help in the implementation of the 2012/13 budget so to get back the economy to a strong growth trajectory,” explained Lipenga.

He added: “The funds will also among other things, help government bridge a financial gap in the implementation of the Malawi Growth Development strategy (MDGS 11) and be source of foreign exchange which is critically needed to fill the existing balance of payments gaps.”

Apart from cautioning from the impacts of devaluation and other bold measures taken by the government to improve the economy, the grant will also help in enhancing social protection through social support programmes.

The finance minister commended the bank for fast -tracking the processes and for living up to the promises a month after it was announced in parliament that the bank would support the country with MK11 billion.

“I want to express on behalf of the government and people of Malawi our appreciations to the AFDB for this budget support operation and for favorably responding to our request to frontload these resources. Let me inform Malawians that we are very blessed this year as our partners are fulfilling their promises,” the minister said.


Andrew Mwamba, AFDB Resident Representative said the bank felt it necessary to help with the grant after being encouraged by the renewed commitment shown by the government in restoring and sustaining a sound fiscal and monetary policy environment.

Mwamba said the budget support was also part of a response to Malawi’s government request for support to help in the implementation of reforms and mitigate some of the impacts of the difficult by necessary actions taken to revamp the economy.

The AFDB boss expressed confidence that the Malawi government would use the fund for the intended purpose.

“We are confident that the resources provided will assist government to create fiscal space for additional social safety net spending towards the poor and the vulnerable groups whilst at the same time significantly allowing the momentum for implementing on-going initiatives to sustain the economic and social reform agenda,” Mwamba said promising for more support to come.

The US$40 million grant is the largest single tranche and most quick disbursement by the AFDB since it joined the Common Approach to Budget Support (CABS) group of donors in 2007.

This is the fourth successive budget support grant the bank is extending to the government of Malawi.

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