05:52 pm - Tuesday 13 November 2018

World Bank agrees to stabilize Malawis’ economy

By Amalawi - Thu Jul 19, 6:48 am

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The World Bank has approved US$150 million to Malawi to support the government with its current reform program. This money will help the resumption of growth, support a fledgling agricultural sector, and above all cushion the inflation costs which quadrupled after the kwacha devaluation.
Malawi economy remains fragile given Malawi’s weak reserve position, and the urgent need to restore fiscal sustainability. Some of the key economic reforms that have been implemented since May 2012 include liberalizing Malawi’s exchange rate regime and significant fuel and power price adjustments to better cover costs of these essential commodities.

World Bank

World Bank

The World Bank will support Malawi through a Rapid Response Program (RRP) that consists of a Rapid Response Development Policy Grant which is a budget support operation worth $50 million; and additional financing for two on-going projects. The projects, which will get $50 million each, are the Irrigation, Rural Livelihoods and Agricultural Development (IRLAD), and the Third Malawi Social Action Fund (MASAF III).

The RRP was prepared within a very short time frame because of the urgent support that Malawi needs. This support is very critical to help maintain the momentum for the bold reforms that Malawi is taking and inject resources needed to mitigate economic transition costs. “The resources will also help quickly scale up social protection programs and agriculture investments for small farmers to mitigate the effects of the adjustments in the economy on the poor,” she added.
The budget support operation for the Financial Year 2012-2013 will focus on efforts to restore macroeconomic stability, improve functioning of the petroleum market and incentives to exporters, including smallholder tobacco farmers. It will also improve economic management of the farm input subsidy program and strengthen social protection interventions and the resilience of the most vulnerable groups to shocks.

Both MASAF and IRLAD will provide mitigation measures for the vulnerable people in rural and urban areas, and smallholder farmers. The Additional Financing (AF) for MASAF will help scale up the social safety net program through labor intensive public works. It will have nationwide coverage. The number of additional beneficiaries will be 586,000 households or 2.9 million people. The expanded Public Works Program is expected to be implemented in the next twelve months.

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