In particular, the grant has been provided in support of policy changes undertaken to improve the functioning of agricultural markets, create a conducive environment for the private sector, and improve payroll management and external financial accountability of the Government.
“The PRSC series is a central pillar of the Bank’s efforts to support implementation of the MGDS,” said Malawi Country Manager Timothy Gilbo. “And we are very pleased to have approved our first grant within the framework of the CABS, which is a step towards the goals outlined in the Paris Declaration on Aid Effectiveness.” Historically, this is the first time the World Bank is giving a PRSC to Malawi.
The PRSC program is expected to have the following benefits. It is expected to contribute to the bridging of a financing gap in the implementation of the MGDS. It should also help the policy and institutional reforms to help consolidate the macroeconomic gains that Malawi has registered over the last three years. Another benefit it should bring is that it will contribute to improving aid effectiveness by being part of a harmonized approach to budget support. Lastly, the expected impact on agricultural incomes, employment generation in the private sector and public service delivery will contribute towards the achievement of the Millennium Development Goals.
“This support is coming at the right time for us. Now that we have managed to create stable macroeconomic conditions, our focus is shifting to creating conditions for improved profitability in agriculture, removing bureaucratic constraints to doing business, and reducing our vulnerability to weather shocks,” said Finance Minister Goodall Gondwe. “We believe that improvements in these areas will ensure that improved macroeconomic conditions translate into sustained high growth rates and improved welfare of our people.”
In recent years Malawi has made significant progress in restoring macroeconomic stability. It has successfully concluded three reviews of the IMF supported Poverty Reduction Growth Facility (PRGF) and is about to conclude the 4th and 5th reviews. Malawi also reached the Highly Indebted Poor Countries (HIPC) Completion Point in August 2006 and qualified for the Multilateral Debt Relief Initiative (MDRI).
Source: The World Bank
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