The World Bank is to support Malawi with a grant of $80 million (about K140 billion) to improve resource mobilisation, budget execution and transparency of public finances to assist the achievement of results under the Malawi Public Finance Management (PFM) Strategy 2023-2028.
In a statement made yesterday, the bank says the International Development Association (IDA) grant complements the International Monetary Fund (IMF) Extended Credit Facility (ECF) arrangement and World Bank Development Policy Financing (DPO), both approved in late 2023.
According to the bank, as a Programme for Results (PforR), the funds will be unlocked upon the achievement of indicators such as an increase in domestic value-added tax (VAT) revenue collection, decreases in variance between approved budget and expenditure outturn and an increase of contract data accessible by citizens.
World Bank Country Director for Malawi, Zambia, Zimbabwe, and Tanzania Nathan Belete says low forex reserves and limited fiscal space have been major challenges for Malawi despite a new IMF programme and the recent World Bank DPO series.
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Belete says the Fiscal Governance Programme for Results, therefore, presents a new and innovative financing instrument that will enable the government to unlock additional resources in a more predictable manner over the next five years, while also serving as a platform for harmonized planning, coordination and utilisation of resources for service delivery.
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Minister of Finance Simplex Chithyola Banda said the total expenditure required by our PFM Strategy is about $146 million and that now, with this IDA financing of $80 million, authorities are slightly above 50 percent of the required resources.
“I am very optimistic that, with this, we will create a solid foundation for our fiscal governance and sustain policy reforms throughout the span of the PFM Strategy implementation,” Chithyola Banda said.
Commenting on the development, Blantyre-based economist Marvin Banda said in an environment where fiscal-imbalances have been driven by delinquent expenditures and policy slippages it is a vote of confidence from the nation’s development partners.
He observed that as the PFM strategy aims to continue Malawi on the right track to structural changes that aim to enhance public finance management; which has been problematic in recent year.
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“It falls upon the institutions and leadership to follow the implementation plans and recommendations under the various donor-engaged financing plans such as the ECF and to stick to the reformations that these programmes prescribe in order for the nation to graduate from the point of lethargy in economic growth through transparent management of public finances.
“This can be seen as the government investing in regaining credibility of the Nation’s mismanaged systems and improving government’s ability for optimal and coherent utilization of public resources for the best possible service delivery which is aligned to national development policy priorities under the MIP-1 through to MW2063,” Banda said.
The government recently launched the Malawi PFM Strategy 2023-2028 with the overarching objectives of attaining sound financial management and discipline in public service delivery for sustainable development, restoring credibility and confidence in government systems, and creating an enabling environment for more effective development performance.
According to the World Bank, the five-year Malawi Fiscal Governance Programme for Results, the first of its kind for Malawi, will co- finance the implementation of the PFM Strategy.
The Bretton Woods institution further says the successful achievement of targeted results will unlock additional financing for the government and help to increase trust while strengthening controls for spending through government systems.
