Malawi’s key donors have pledged a total of around $496 million in budget support, an increase of 140 percent from last year when they pledged $210 million, Finance Minister Ken Lipenga said on Friday
“Total revenue and grants for the 2012/13 budget are projected at $1.6 billion made up of K270.39 billion and K124.08 billion ($496 million) in domestic revenues and grants respectively,” he said.
Malawi’s economy had been teetering on the brink of collapse after former president Bingu wa Mutharika picked a fight with major donors whose support accounts for about 40 percent of the budget.
The donors decided to withhold their support from January last year which led to a $121 million budget hole in the 2011/12 fiscal year, and the suspension of an IMF aid programme.
“This year grants from cooperating partners have increased by 140 percent, reflecting renewed confidence in the new government,” Lipenga told Reuters in an interview.
Last week the Fund said it had reached a staff-level understanding with Malawi on an economic program for three years that could be supported by a new Extended Credit Facility (ECF) arrangement in the amount of SDR104 million (about US$157 million
“The successful passage of the [FY2012/13] budget will help pave the way for approval of the new ECF program by the IMF’s Executive Board in July 2012,” said Ruby Randall, IMF resident representative to Malawi.
The 2012/13 budget seeks to restore macro-economic balance and a market based economy that will provide a foundation for sustainable economic growth in future, Lipenga said.