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World Bank provides $80 million towards budget

Economic experts are divided in opinion on the resumption of direct budgetary support to Malawi by the World Bank, with opponents stressing that this will result in the government taking a relaxed approach on the suggested amendments in the Public Audit Act.

The World Bank has become the first member of the international community to resume direct budgetary support to Malawi following an announcement made on Thursday that it will provide a credit of $80 million towards the 2017/18 National Budget.

According to a statement that Malawi News has seen, the credit, referred to as the Agricultural Support and Fiscal Management Development Policy Operation (DPO), aims to improve incentives for private sector participation in agricultural markets and to strengthen fiscal management through more effective expenditure controls and greater transparency.

World Bank Country Manager, Laura Kullenberg, emphasised that Agriculture remains central to the fortunes of Malawi which makes the DPO a potentially high return operation as it will support an emerging reform agenda while acting as a stabilising measure for the Malawi economy.

“The Government has taken some very important reform steps and it is critical to maintain momentum and deepen reforms going forward to move Malawi out of the cycle of vulnerability and onto a positive development path,” said Kullenberg.

Commenting on the development, Chief Executive Officer of the African Institute for Corporate Citizenship-AICC, Felix Lombe, holds that while the development will unlock the international community in resuming direct budgetary support to Malawi, it removes the pressure on government to achieve financial prudence.

“The fear is that government will relax on the suggested amendments in the Public Audit Act, which it appears, other development partners wanted first before making their budgetary commitments” said Lombe.

Lombe went on to say that the development is indirectly a lost opportunity to make government do the needful especially on the operations of the office of the Auditor General.

“Now that the World Bank has done it in the absence of the repeals, the pressure on the government to fast-track and make the much-needed amendments will ease off,” he added.

But Executive Director of the Malawi Economic Justice Network (Mejn), Dalitso Kubalasa, emphasises that the move by the World Bank to resume direct budgetary support does not mean the government will relax because a big chunk of the budget funds will still be sourced locally.

“This is a good development that we should use to rally a lot more energy that as a nation, we can do more. What this means is we should intensify what we really need to do and the basics are our own resources and how much more we are doing towards tax compliance and dealing with tax evasion” said Kubalasa.

Malawi’s Development partners resorted to suspend direct budgetary support to Malawi in 2013 following revelations of massive plunder of public resources by civil servants.

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