AfDB Approves USD 17.5 Million Budget Support for Malawi

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Tunis, 7 April 2010 – The Board of Directors of the African Development Fund (ADF), the concessional window of the African Development Bank (AfDB) Group, approved on Wednesday, 7 April 2010  in Tunis a USD 17.5 million (Units of Accounts 11.5 million) grant to assist the Malawian government in implementing its Growth and Development Strategy aimed at reducing poverty.  

The Governance and Poverty Reduction Support Grant (GPRSG II) will support the Government’s plans to improve efficiency, transparency and accountability in the use of public resources while providing resources for protecting social expenditures and improving public service delivery.  The program will support policy and institutional reforms to strengthen economic governance and public financial management, through improvement in the budget process, external auditing, and public procurement. This will be achieved through both ongoing policy dialogue between the Bank and the government as well as achievement of agreed conditions for the grant by the government.  The grant is part of a broader package of support both from the Bank and from other development partners to support the government’s plans to strengthen governance and reduce poverty.

The operation is expected to generate several results through improved government performance and spending on pro-poor services, like health and education, to benefit Malawian citizens. Improved budget allocation, implementation and monitoring will improve budget efficiency; the independence of the audit function and timeliness of audit reports, strengthen checks and balances; and audit and procurement procedures which will allow a more efficient use of resources and will reduce opportunities for corruption.  

The government has taken important steps in recent months to overcome macroeconomic policy challenges which were compounding the negative effects of sluggish global commodity prices, particularly tobacco. Against this context, the GPRSG II budget support programme provides important flexibility to help the government protect pro-poor spending.  Mr Gabriel Negatu, Director of Governance at the AfDB noted that: “The improved financial governance as a result of this programme will help Government continue their work in improving efficiency, preventing corruption and strengthening the accountability of Government to Malawian citizens”.

The programme was designed in partnership with the government as well as other development partners including the IMF. The Bank currently chairs the Common Approach to Budget Support (CABS) donor group in Malawi. “The collaborative working of the Bank with Government and development partners including the IMF has helped to strengthen the design of this programme and, by working together on common challenges; partners have ensured that the programmes of each donor complement each other” Mr Frank Kufakwandi, the Bank’s Resident Representative in Malawi added.