• Référence: P-MW-KZ0-005
• Date d’approbation: 07/04/2010
• Date de début: 17/05/2010
• Date d'évaluation: 13/11/2009
• Statut: En coursOnGo
• Agence d'implémentation: MINISTRY OF FINANCE
• Emplacement: MALAWI

Background:

Malawi made considerable improvements in macroeconomic management in the last decade as a result of strong macroeconomic reforms and fiscal discipline.  These positive developments nonetheless took place against the background of structural challenges that make Malawi vulnerable to external shocks. The volatility in export earnings has combined with a narrow export base and emerging supply side challenges to growth (notably the generation and supply of electricity) to aggravate Malawi’s chronic low international reserves in the context of a fixed exchange rate regime. Also, pressure on the budget mounted after 2008. The expansionary fiscal stance has made foreign exchange less available for the private sector, combining with other challenges to jeopardize growth.  

Working with development partners, Government took difficult economic policy choices in late 2009 to improve the situation including the adoption of a crawling exchange rate peg, improving foreign exchange reserves and government commitment to terminate unbudgeted outlays.  As a result, the medium term prospect for growth looks stronger than before.  

Rationale:

The convergence of the Government’s attempt to reinvigorate PFM and difficult choices for economic policy make it urgent and effective for the Bank to complement other budget support donors in providing budget support to Malawi (namely DFID, EU, Germany, Norway, and the World Bank).

The GPRSG II is consistent with Malawi’s Results-Based Country Strategy Paper for 2005-09 (extended to 2010), which focuses on promoting economic growth by improving governance and human resources development. There have been several similar operations by the Bank in Malawi, notably the PRSG I. Its Project Completion Report concluded that it was implemented as planned and substantial progress was made, notably in strengthening PFM and preparing a successor programme

Objective:

The broad goal of the GPRSG II is to reduce poverty as laid out in Malawi’s MGDS. More specifically, the program’s objective is to enhance the efficiency, transparency and accountability in the use of public resources (improve financial governance) while helping increase public service delivery. To that end it builds upon the Government’s reform program as defined in the Government’s Letter of Development Policy, which lays out the Government’s challenge of stimulating the implementation of its recently redesigned Public Financial and Economic Management (PFEM) Prioritised Action Plan (PAP).  By improving financial governance through greater efficiency, transparency, and accountability in the use of public resources, the GPRSG II seeks to make the budgeting process more efficient and enable both more and better provision of social services, especially to the poor.

Description:

A 2 financial year Development Budget Support Grant of a total value of Units of Account 11.546 million (US$ 17.7 million) with a 70%, 30% frontloading on year 1 (2009/10), the GPRSG II focuses on three pillars (PFM reforms, audit and procurement) in support of the Government’s priorities.

• Address shortcomings in pushing forward PFM reforms
• Improve timeliness and independence of external audit
• Improve procedures and practice in public procurement

Expected Results:

The operation is expected to generate several benefits. At the general level, the increased pro-poor expenditures and more effective and accountable government would sustain a stable macroeconomic environment. This would strengthen budget management and therefore credibility, improving confidence in government policies. The frontloading of tranche one with 70% of the programme resources responds to Government’s request to assist in maintaining pro-poor expenditure in the context of the 2009/10 global economic slowdown.  The GPRSG II will directly benefit the Ministry of Finance and other key public sector institutions (such as the PFEM Secretariat and NAO) in the short term by allowing them to speed up reform processes that promote transparency and accountability in the management of public resources. It should lead therefore to improving the ranking of Malawi in key international governance indicators, in particular CPIA and those related to Doing Business.

Principal specific expected results are:

• More effective implementation of PFEM reform (as measured by attaining the activities scheduled in the PAP) by the PFEM Secretariat, leading to improved budget allocation, implementation and monitoring to prevent unbudgeted expenditures; 
• improvement in the independence of the NAO and a reduction in the delay with which annual audit reports are tabled in Parliament, improving the checks and balances of the branches of government; and
• strengthening internal audit and public procurement procedures, notably as regards increases in staffing and internal oversight, allowing a more efficient use of resources and reducing opportunities for corruption.

GPRSG II Policy dialogue and the coordinated technical assistance program will also contribute to:

• improved capacity of government officials to implement reforms, leading to a more efficient PFEM; and
• greater delivery of social services, particularly for the poor.

In this way, the programme will contribute to strengthening economic and financial governance and to funding pro poor expenditures for poverty reduction (both directly as funds are used for these purposes, and indirectly as a result of improved government efficiency and effectiveness).

Programme team:

Role	Name
Task Manager	Kate Mirran TENCH, Governance Department
Task Manager (Backup)	Fenwick Dingiswayo KAMANGA Malawi Field Office
Division Manager	Carlos SANTISO Governance Department
Director	Gabriel NEGATU Governance Department
Country Economist	Martha Thumbilo Mphande PHIRI Malawi Field Office
Resident Representative	Simona Frank KUFAKWANDI Malawi Field Office
Disbursement Officer	Devota Lorraine KISHOSHA Finance Department
Lawyer	Takem ENAW Legal Department

 

 

KAMANGA Fenwick Dingiswayo - OSGE1

Source	Montant
FAD	UAC 11.546.000
Total	UAC 11.546.000