African bank commits to helping Malawi economy

The head of the African Development Bank said on Sunday that he is willing to provide $45-million in budget financing for Malawi to help new President Joyce Banda revive the struggling economy.

Speaking after meetings of the International Monetary Fund and World Bank in Washington, African Development Bank President Donald Kaberuka said he was determined to support Malawi as it tries to resume economic reforms.

He said he had held “good” discussions with the Malawi Finance Minister Ken Lipenga on the sidelines of the meetings.

“I am confident Malawians are doing the right thing and we want to support them,” Kaberuka said in an interview.

“This will be $45-million in two tranches. I am considering front loading this first tranche to support the currency realignment and to make the next tranche a floating one.”

Kaberuka said the development bank would begin discussions on budget support, which were put on hold last year.

“Now that they are having very constructive discussions with the IMF, I am prepared absolutely to support Malawi as they resume the reforms, which were doing so well some time ago,” he added.

Donor cuts hurt economy
Malawi’s economic difficulties have worsened since last year after donors, that had traditionally bankrolled about 40% of the budget, suspended aid over human rights concerns about the former president, Bingu wa Mutharika, a former World Bank economist.

The collapse of donor funding put pressure on the currency, the kwacha, forcing a 10% devaluation last year.

Banda, a former vice president of Malawi and long-time women’s rights activist, was sworn in as president on April 7 after Mutharika’s unexpected death from a heart attack.

One of her first moves as president was to fire Malawi’s police chief for the killing of 20 people in anti-government protests in July 2011, which drew international condemnation and led to aid cuts.

Kaberuka said he was confident that Malawi would be able to repair its relationship with its donors.

The IMF said last week it was in discussions with Malawi on a new economic program that would be supported by an IMF loan.

The Fund suspended its $79-million program with Malawi last year over Mutharika’s handling of the economy. The aid freeze compounded an acute dollar shortage caused by a sharp decline in tobacco sales, Malawi’s main source of foreign revenue.

Lipenga said on April 9 that Mutharika had blocked plans called for by the IMF to devalue Malawi’s currency because he worried the move would hurt the poor.

The IMF wants to see the kwacha further devalued, saying too much of the state’s reserves are being used to defend it. — Reuters

Subscribe to the M&G for R2 a month

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

And for this weekend only, you can become a subscriber by paying just R2 a month for your first three months.

Lesley Wroughton
Lesley Wroughton works from Washington. I write about U.S. Foreign Policy for Reuters based in Washington. Opinions are my own and retweets are not an endorsement. Lesley Wroughton has over 1577 followers on Twitter.

Related stories

Sudan’s government gambles over fuel-subsidy cuts — and people pay the price

Economists question the manner in which the transitional government partially cut fuel subsidies

China blamed for Zambia’s debt, but the West’s banks and agencies enabled it

The narratives about the African country’s debt crisis are being used as fodder in geopolitical battles

Patel: South Africa on target to attract R1.2-trillion in investments

The trade minister says the country is on track to reach more than R1-trillion worth of investments over five years, despite Covid-19 disruptions

Public wage bill is impeding SA’s growth prospects — Busa

Business Unity South Africa is eager to talk to its social partners at Nedlac about how the spiralling public-sector wage bill can be tamed. And the organisation says these talks need to happen soon

Dance with the ‘devil’: Why SA has fought off the IMF for so long

The ANC has, until now, always rejected going to the International Monetary Fund, which underscores how bad our economic situation is

South Sudan’s forex shortage highlights broader economic crisis

South Sudan has nearly run out of foreign currency – and this is just the tip of a much bigger economic crisis.

Subscribers only

Q&A Sessions: Frank Chikane on the rainbow where colours never...

Reverend Frank Chikane has just completed six years as the chairperson of the Kagiso Trust. He speaks about corruption, his children’s views and how churches can be mobilised

ANC: ‘We’re operating under conditions of anarchy’

In its latest policy documents, the ANC is self-critical and wants ‘consequence management’, yet it’s letting its members off the hook again

More top stories

‘Where the governments see statistics, I see the faces of...

Yvette Raphael describes herself as a ‘professional protester, sjambok feminist and hater of trash’. Government officials would likely refer to her as ‘a rebel’. She’s fought for equality her entire life, she says. And she’s scared of no one

Covid-19 stems ‘white’ gold rush

The pandemic hit abalone farmers fast and hard. Prices have dropped and backers appear to be losing their appetite for investing in the delicacy

Al-Shabab’s terror in Mozambique

Amid reports of brutal, indiscriminate slaughter, civilians bear the brunt as villages are abandoned and the number of refugees nears half a million

South Africa’s cities opt for clean energy

Efforts to reduce carbon emissions will hinge on the transport sector

press releases

Loading latest Press Releases…