World Bank non-committal to support Malawi budget

The World Bank has failed to make a commitment on whether the global multilateral development bank could render direct budget support to Malawi for the troubled 2014/15 National Budget.

“We are still looking at budget support and we are discussing with the government in the context of Common Approach to Budgetary Support (Cabs). So, that is still under discussion,” said the bank’s country manager for Malawi Laura Kullenberg.

The bank’s country boss was speaking in Lilongwe after Malawi signing loan agreements with the bank for two projects-the Malawi Social Action Fund (Masaf 4) and the Skills Development Projects worth a combined $83.8 million (approximately K34 billion).

World bank’s country manager for Malawi Laura Kullenberg: Still under discussion
World bank’s country manager for Malawi Laura Kullenberg: Still under discussion

Angered by revelations of massive looting of public funds christened Cashgate, World Bank, alongside other major donors under Cabs, are still withholding budget support for Malawi after collectively announced the decision on November 7, last year.

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

So far, only the Tunisia-based AfDB has earmarked $15 million (about K6 billion) towards the 2014/15 National Budget which is estimated to cost Malawi K743 Billion (US$1 790 361 446). With such an amount the AfDB assistance would just be described as a grain of sand in an ocean.

“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,” that’s how far Kullenberg could go when quizzed on any expectations from the talks.

She, however, 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.

Meanwhile, 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—all donor support through the budget remains suspended.

Malawi Government is currently grappling with the task of coming up with its national budget following the decision by the donors not to support the national fiscal plan.

The development has forced government to look towards punitive tax measures in a bid to close the huge budget deficit gaps.

Recently, Finance Minister Goodall  Gondwe admitted that the budget is likely to face challenges due to the aid suspension.

Already Gondwe had a rude awakening when the donors turned back his begging bowl for support of almost K200 billion towards the health sector which is one of the sectors to be affected by the budget constraints.

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