Donors pledge aid funds

A group of 24 bilateral and multilateral donors meeting in Malawi’s capital, Lilongwe, last week pledged to fund the country’s external financing needs to the tune of about US $1.1 billion for the period 2000-2002, the World Bank said on Friday after the conclusion of the three-day 10th Consultative Group (CG) meeting. “Based on the discussions during the CG meeting and provided that Malawi strengthens the implementation of its reform programme, donor pledges indicate that these requirements will be fully met,” the World Bank said in a statement received by IRIN on Monday. The meeting, however, expressed concern at Malawi’s high inflation rate of 44.8 percent and interest rates currently above 50 percent. “These high inflation and interest rates continue to harm the economic fabric of Malawi and its scope for significant poverty reduction,” the World Bank said. It added that as a result, real GDP grew only by 4.5 percent in 1999 and is expected to be five percent this year as opposed to a minimum of 6 percent growth required to have a meaningful impact on poverty. At the same time, the country’s current account deficit, according to the International Monetary Fund (IMF), is projected to rise from 5.5 percent of GDP this year to 6.4 percent in 2001 and to 7 percent in 2002. The IMF attributes this rise in government expenditure to weak control procedures and budgetary resources. Malawi, which spends about US $100 million annually to service its estimated US $2.4 billion external debt, is one of the poorest countries in the world. The UNDP figures have ranked Malawi the 121st poorest country out of 137 nations. Its government estimates that about 60 percent of its 11 million people live below the poverty datum line. Malawi, according to the government of President Bakili Muluzi, depends heavily on donor funding for its budgetary expenditure. Donors provide about US $400 million annually for budgetary support while tobacco exports earn the country about a third of foreign exchange.