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Malawi's donors pledge nearly $500 mln in budget aid
by Mabvuto Banda

Reuters    Translate This Article
15 June 2012

LILONGWE (Reuters) - Malawi's donors have pledged $496 million in budget support for the 2012/13 financial year, more than double pledges for the previous year's budget, Finance Minister Ken Lipenga said on Friday.

Malawi's economy had been teetering on the brink of collapse after former President Bingu wa Mutharika picked a fight with donors whose support usually accounted for about 40 percent of the budget.

New President Joyce Banda, who came to office in April after Mutharika died of a heart attack, has worked to restore aid flows frozen in the diplomatic fights.

'This year grants from cooperating partners have increased by 140 percent, reflecting renewed confidence in the new government,' Lipenga told Reuters in an interview.

Banda has tried to win Western support by rolling back Mutharika legislation seen as suppressing human rights. She has also sought to increase spending on social programmes in an impoverished state with one of the world's highest rates of death during childbirth.

She has also removed the kwacha's peg against the dollar, leading to a depreciation of more than a third against the greenback, as requested by the International Monetary Fund for a resumption of financial support.

Former colonial master Britain, the IMF and others have pledged to provide hundreds of millions in aid to help Banda rebuild the economy, which has also been hit by a slump in tobacco exports.

Malawi's budget deficit ballooned to a record 7.3 percent of GDP in the 2011/12 financial year, way above an IMF-approved target of 1.5 percent, due to a sharp economic slowdown, Lipenga said earlier this week.

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