World Bank unlocks $137m Direct Budgetary Support to Malawi

World Bank has approved direct budgetary financing for the first time since 2017 for enhancement of fiscal sustainability and transparency, stimulate private sector-led growth, and increase resilience to shocks.

In a statement which the Bank has released, the Bank says is providing Malawi
with budget support that will help the country achieve economic growth.

“The Government of Malawi has demonstrated commitment to address macroeconomic imbalances, unsustainable debt, and longstanding structural and business environment constraints inhibiting private sector-led growth. It is also taking robust steps to restore macroeconomic stability through addressing long-standing fiscal, monetary and external sector imbalances, as reflected in the new Extended Credit Facility with the International Monetary Fund (IMF),” reads the statement in part.

In the statement “The World Bank applauds Malawi’s authorities for taking tough but necessary decisions to stabilize an acute macro-economic crisis. I am pleased the Bank is now able to respond with a substantial budget support operation that supports an ongoing program of reforms. The Bank will also continue to work closely with the authorities and all international partners to protect the poorest while pursuing a much needed economic turnaround. Together, we must ensure this operation marks a turning point in the country’s economic fortunes,” says Nathan Belete, World Bank Country Director for Malawi, Zambia, Zimbabwe, and Tanzania.

In the statement, the World Bank Board of Executive Directors approved the “Malawi First Growth and Resilience Development Policy Operation with Catastrophe Deferred Drawdown Option (Cat-DDO)” a $137 million package which consists of an immediate release of $80 million to support reforms and recovery and a $57 million CAT-DDO that can be triggered in the event of a crisis.

In the statement the DPO, the first in a series of two operations, is anchored in a robust government-led structural reform
agenda.