Malawi

Malawi: Britain releases £20 million in budget support

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LILONGWE, 25 July (IRIN) - The British government has released =A320 million in budget support to Malawi, saying the country had "turned the corner" and was making "real progress" in fiscal discipline.

This is the first disbursement of the =A360 million set aside by the British government as budgetary support, making Britain the first bilateral donor to provide macroeconomic support since the International Monetary Fund (IMF) froze aid to Malawi in 2000 as a result of overspending and corruption by the previous government.

"What we see are signs of growing trust from the donors towards the Malawi government. Britain must be recommended for this good gesture - it is now up to government to prove that the money will be used for the intended purpose and according to the budget," said Collins Magalasi, national coordinator of the Malawi Economic Justice Network.

Roger Wilson, head of the British government's Department for International Development (DFID) in Malawi, said the funds had been released in response to parliament's approval of the national budget last week.

The opposition, having a majority in parliament, had held up the budget but relented under pressure from donors and civil society.

British High Commission spokesman Lewis Kulisewa said the funding decision followed a favourable assessment of Malawi's economic and development policies by the Common Approach to Budget (CABS) group. CABS comprises the major donors, who have acted in concert in recent years.

The IMF is expected to meet in August to discuss Malawi's newly approved budget. "Some donors that are part of the Common Approach to Budget Support are likely to release their budget when the IMF board approves a new programme for Malawi," said Kulisewa.

Up to 80 percent of Malawi's development budget is provided by donors, and the country faces enormous challenges related to poverty, food insecurity, HIV/AIDS and the capacity to deliver services.

Aid agencies estimate that at current inflation levels 4.2 million Malawians will be vulnerable to drought-linked food insecurity this year.

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