Tunis, 10 April 2007 –The Board of Directors of the African Development Fund on Wednesday in Tunis approved a US$ 22 million loan to support the implementation of the government of Malawi’s strategy to reduce poverty. The resources will be used to reinforce economic reforms and good governance policies, and strengthen public financial management.
The Poverty Reduction Support Loan (PRSL) is an operation to align the assistance strategies of the Bank Group and other donors with national priorities as articulated in the Malawi Growth and Development Strategy (MGDS). The operation has been designed to fully integrate and harmonize with the joint donor and government Common Approach to Budget Support (CABS) process. This will be a one-tranche operation for the 2007/08 Malawian budget year. The operation fills an identified financial gap (within the MGDS and the Medium Term Expenditure Framework).
Malawi’s economic reform effort has gathered momentum in recent years and there is a more determined and coherent approach to the daunting task of poverty reduction. There has been dramatic improvement in macroeconomic management. Malawi reached completion point under the enhanced HIPC initiative in August 2006. The Government has demonstrated a strong commitment to reform, and there is now a greater sense of ownership of the reform process. This greatly enhances the likelihood of success of the budget support being provided by the donor community. The proposed PRSL will support priority policy actions outlined in the MGDS and CSP. Malawi’s poverty reduction strategy is ambitious and will require strong donor support in the coming years. The PRSL is therefore timely and will augment resources that other donors are providing for poverty reduction programmes.