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US pledges to help Malawi address economic crisis

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The United States (US) government yesterday reiterated its commitment to help Malawi weather the shocks of the current economic crisis.

US Ambassador to Malawi David Young said this in Lilongwe during the launch of the Malawi Social Protection Multi-Donor Trust Fund.

According to Young, the past 12 months have been difficult for people in Malawi and around the world.

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“Putin’s war on Ukraine is causing massive disruptions to the global food system and increasing prices of food, fertiliser and fuel worldwide, worsening an already staggering food crisis caused by factors such as Covid and climate change.

“This has exacerbated an already challenging fiscal situation with the shortages of foreign exchange the country has faced,” Young said.

He noted that the US government is closely following the food security situation in Malawi and remains strongly committed to partnering the Government of Malawi and Malawian people in addressing challenges.

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“We will continue to work hand-in-hand with you to weather the shocks of this current economic crisis and to help the country generate the jobs, incomes and exports it needs to put the nation on track to become an inclusively wealthy and self-reliant nation.

“To that end, we will build on our strong partnership and urge the Government of Malawi to continue to undertake reforms that encourage diversification of the economy and spur investment across sectors,” Young said.

He was, however, quick to note that the US understands that this will not happen overnight and that there are many Malawians in great need.

Young said, in response to economic challenges besetting Malawi this year, the US government has invested an additional $12 million to help the most vulnerable Malawians and would continue to actively seek opportunities to work together to address the immediate needs of the Malawian people.

“For example, in recent months, the US Agency for International Development, or USaid, has helped more than 100,000 smallholder farmers access high-quality, climate-resilient seeds and other agriculture inputs through affordable small loans—which will help to increase their yields and boost their incomes,” Young said.

Commenting on the Malawi Social Protection Multi-Donor Trust Fund, Young said the US government is proud to partner the Malawi Government, the World Bank and the government of Iceland to quickly mobilise resources and establish one of the largest efforts for social protection that Malawi has seen in years.

The new trust fund, Young said, is an important milestone toward harmonising social protection financing in Malawi.

Iceland Embassy Head of Mission, Inga Dóra Pétursdóttir, said the trust fund is a crucial instrument in supporting power households in Malawi.

Pétursdóttir has since said Iceland would contribute $3 million towards the rollout of the fund.

World Bank Country Manager for Malawi Hugh Riddell said the bank, through the International Development Agency (Ida), is fully committed to Malawi’s social protection vision and strategy.

According to Riddell, in December last year, Ida agreed with Malawi on an additional $100 million on top of $178 million guaranteed earlier in the year.

Riddell said through the Malawi Multi Donor Trust Fund initiative, foreign exchange resources would be coming through the government system through the Reserve Bank of Malawi.

He said though that may not be the final solution to Malawi’s balance of payment challenges, it is an important buffer which would help create predictability in terms of inflows and a better buffer in general.

Finance Minister Sosten Gwengwe said the financing of key social protection programmes, such as the Social Cash Transfer Programme, remains highly fragmented and poorly coordinated.

“Today, we enter into a new and most exciting phase of the social protection sector in Malawi. As part of efforts to help address the fragmentation, government, with support from its partners, has established MDTF,” Gwengwe said.

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