Malawians have yet another reason for celebrating and rejoicing following the decision by the Executive Directors of the International Development Association (IDA) to approve a grant of US$240 million to the Republic of Malawi.
The Executive Directors approved the grant on December 20, 2023, according to the communication from the World Bank.
The communication says the grant will go towards the Regional Climate Resilience Program.
“We look forward to an early signing of the Financing Agreement,” reads a brief communication from the World Bank addressed to the Minister of Finance and Economic Affairs, Simplex Chithyola Banda.
The grant comes barely weeks after the World Bank unlocked US$137m direct budgetary support to Malawi, a development that sent a strong message that it is satisfied with how the administration of President Dr. Lazarus McCarthy Chakwera is running the affairs of the country, especially on rescuing the country’s ailing economy.
In a statement announcing resumption of direct budgetary financing package, the Bank stressed that the Chakwera government “has demonstrated commitment to address macroeconomic imbalances, unsustainable debt, and longstanding structural and business environment constraints inhibiting private sector-led growth”.
“It is also taking robust steps to restore macroeconomic stability through addressing long-standing fiscal, monetary and external sector imbalances, as reflected in the new Extended Credit Facility with the International Monetary Fund (IMF),” reads the statement in part.
The World Bank budgetary support was stopped in 2017 following the massive plunder of government resources by the previous administration of the Democratic Progressive Party (DPP) led by Arthur Peter Mutharika.
The World Bank said resumption of the support is meant to enhance fiscal sustainability and transparency while stimulating private sector-led growth and increase resilience to shocks.
The Bank further said the budgetary support will also help the country achieve economic growth.
“The World Bank applauds Malawi’s authorities for taking tough but necessary decisions to stabilize an acute macro-economic crisis. I am pleased the Bank is now able to respond with a substantial budget support operation that supports an ongoing program of reforms,” said Nathan Belete, the Bank’s Country Director for Malawi.
Belete said the Bank will continue to work closely with the authorities and all international partners to protect the poorest while pursuing a much needed economic turnaround.
“Together, we must ensure this operation marks a turning point in the country’s economic fortunes,” said the Country Director.
The budgetary support package, in the form of US$137 million Catastrophe Deferred Drawdown Option (Cat-DDO), consists of an immediate release of $80 million to support reforms and recovery and a US$57 million Cat-DDO that can be triggered in the event of a crisis.
