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World Bank Withholds Aid

The local media today reports that the World Bank is unable to make available to Malawi K6 billion budgetary support funds for the 2010/2011 fiscal year because Malwi has failed to conclude a review of its programme with the International Monetary Fund.

The World Bank says there is need to address persistent external imbalances that “threaten to derail the country from its current growth trajectory” and prays that Malawi and the IMF reached an agreement on the matter soon.

Daily Times reporter Thom Khanje quotes World Bank Country Manager for Malawi Sandra Bloemenkamp as saying a successful review of Malawi’s programme with the IMF was crucial as it would help the World Bank assess Malawi’s macro-economic performance.

“At the moment, we are not able to proceed to board presentation (of Malawi’s budget support operation).

“We hope that agreement between government and the IMF will be reached soon on the critical reforms to help address the persistent external imbalances that threaten to derail the country from its current growth trajectory,” the paper quotes the World Bank’s Bloemenkamp as saying.

The Daily Times quotes the World Bank as assuring that Malawi would still get the budget support immediatelyan agreement is struck between it and the IMF.

Three months on now, discussions between the Malawi government and the IMF are still going on with IMF disclosing that the two parties have for two months failed to conclude the review owing to differences on some key issues.

While this is happening, Britain and Germany have already suspended aid to Malawi owing to reasons spanning from human rights and good governance to general review of diplomatic ties.

In an apparent quest to preposition against an economic catastrophe, president Bingu wa Mutharika, whose government eventually bares the consequences of this, has announced, for the first time ever, that Malawi will trun the 2011/2012 national budget on zero-deficit on the recurrent budget.

The decision has sparked a lot of debate among various players with some economists arguing that government simply wishes to push the burden on citizens with increased taxes.

Malawi Finance minister Kin Kandodo presents his 2011/2012 national budget Friday June 3.—Zodiak Online

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