US$40 million AfDB fund supports Malawian budget

Malawi AfDB and ADFMalawi has been granted approximately US$40 million by The African Development Fund (ADF), part of the African Development Bank (AfDB), to cushion vulnerable groups from the negative impacts of recent economic reforms

The Restoration of Fiscal Stability and Social Protection (RFSSP) budget support programme aims to help restore macroeconomic stability, enhance public finance management, as well as support social protection measures to mitigate the short-term impacts of the devaluation of the Malawi kwacha.

The RFSSP is the African Development Bank’s (AfDB) response to Malawi’s request made to development partners to help mitigate some of the impact of the difficult but necessary measures taken by the government.

The Malawian government has undertaken bold measures to boost the nation’s economy, including devaluing the kwacha by 49 per cent and adopting a floating exchange rate regime in May this year.

The introduced reforms, particularly devaluation, were followed by upward price adjustments of 30 per cent in the retail prices of petroleum products and a 63 per cent increase in electricity tariffs, which have eroded the purchasing power of consumers and magnified social hardships among the population.

The RFSSP will, therefore, contribute significantly towards boosting the Malawi government’s momentum for implementing on-going initiatives to sustain its economic and social reform agenda.

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