World Bank impressed with Malawi's fiscal prudence, pledging more support

22:19, June 30, 2010      

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As the 2009/10 financial year winds up on June 30 and the 2010/11 financial year commences on July 1, the World Bank has told Xinhua that it is impressed with the progress the Malawi government has made over the past five years and that the bank will continue to provide budget support to the government.

"The government has made encouraging progress over the past five years to attain and sustain high levels of growth as well as ensure fiscal prudence. The government is on track and we remain confident that it will continue to exercise prudent macro-economic management," World Bank Country Manager Sandra Bloemenkamp said in an interview with Xinhua.

"It is encouraging to note that the 2010/11 budget (of Malawi) is also reflecting a prudent fiscal stance, targeting a repayment of net domestic borrowing in line with the medium-term objectives to maintain a low deficit and create room for private sector credit," said Bloemenkamp.

Bloemenkamp observed that in 2008/09 budget Malawi faced multiple exogenous shocks such as increasing fuel and costs, against loosening fiscal and monetary policies and that this resulted in higher fiscal deficit and critically low foreign exchange reserves, among other challenges.

But she said the Malawi government has since renewed its commitment to prudent macro-economic management as evidenced by the February 2010 extended credit facility agreed with the International Monetary Fund (IMF).

"This program aims at restoring both the internal and external imbalances to ensure that the country is able to continue to focus its efforts on sustaining high growth and poverty reduction, underpinned by sound macro-economic and exchange policies, in line with the government's aspirations articulated in the Malawi Growth and Development Strategy (MGDS)," explained Bloemenkamp.

The global financial institution released its 2009/10 budget support of 54 million U.S. dollar to the Malawi government on June 16, 2010, two weeks before the end of the financial year. But the World Bank country manager said the grant was made available to the Malawi government within the agreed time frame.

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