The World Bank has approved $137 million (K232 billion) of budget support for Malawi, with an immediate disbursement of $80 million, the bank said in a statement.
The funding will help the country enhance fiscal sustainability, stimulate private sector-led growth, and increase resilience to shocks, the World Bank said.
After the initial $80 million (K136 billion), the remaining $57 million (about K96 billion) can be triggered in the event of a crisis, it added.
“The Bank is now able to respond with a substantial budget support operation that supports an ongoing program of reforms,” said Nathan Belete, World Bank country director for Malawi, Zambia, Zimbabwe and Tanzania.
The International Monetary Fund, which approved a loan of about $178 million to Malawi in November, has said the country needs almost $1 billion in debt relief by 2027.
Post the implementation of some reforms, including the 44 percent kwacha devaluation to re-align it with its market value and committing to debt restructuring to secure an Extended Credit Facility programme with the International Monetary Fund, Malawi has won favour with some sections of multilateral and bilateral donors.
Since clinching the deal, the European Union announced plans to front-load about 60 million Euro before the end of the year to inject some forex in the local economy.
Donors such as the World Bank, the EU, Norway and the United Kingdom, under what was called the Common Approach to Budget Support, stopped providing direct budget support to Malawi in September 2013 following revelations of Cashgate, the plunder of public resources at Capital Hill through inflated invoices, payment for goods and services not rendered or delivered and fraud.
The development left Malawi with a 40 percent hole in the recurrent budget and about 80 percent in the development budget as the donors opted to channel resources in form of off-budget support through international non-governmental organisations.
