The World Bank has committed $304 million to go towards government projects and progrommes in various sectors.
Minister of Finance Sosten Gwengwe confirmed the development in a written response, saying the government is searching for more resources, and the World Bank has been supportive.
Gwengwe added that much of the resources will come in the form of grants.
“Injection of adequate dollar resources into the market is key to stabilising the economy,” the finance minister said.
About $185 million of the money will be under social support and resilient livelihood programme, $30 million for Africa Centre of Excellence, $60 million for the restoration of the Kapichira Power Station and $134 million for phase two of the Shire Valley Transformation Project.
The commitments are coming at a time Malawi is struggling with foreign currency scarcity as forex reserves continue to hover around 1.5 months worth of imports.
In its recent Economic Review, Bridgepath Capital stated that import cover for gross official reserves by March was at 1.5 months, a decrease of 2.60 percent from 1.54 months in the preceding month.
Economist and Centre for Research and Consultancy Executive Director Milwad Tobias said this, if it materialises, means that there will be a huge injection of dollars into the system, which may improve the exchange rate.
Tobias added that the funds should be effectively handled because there are some funds secured for projects that are failing to take off, thereby depriving the economy of needed growth.
“This, however, does not mean that donors have gained confidence in us because these funds are being channeled towards projects and not direct budget support. What will show that donors have reignited their trust will be direct budget support,” he said.
Projects such renovation of the Kapichira Power Station is crucial for Malawi, which is facing persistent power outages.
Electricity Generation Company said the damage to the power station removed 132 megawatts from the country’s main grid and the station needs about K18 billion to be rehabilitated.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.