September 15, 2005

World Bank grant to manage impact of drought

The World Bank Board of Executive Directors has approved an International Development Association (IDA) grant of US$30 million to support emergency recovery activities in Malawi. The Malawi Emergency Recovery Project will support the Government of Malawi's efforts to adequately feed its people and allow agriculture production to rebound following the drought-induced emergency in early 2005, and thereby support the growth path central to the Government's macroeconomic program adopted in May 2004.

The grant will provide foreign exchange to support critical private sector imports. The domestic financial resources generated by the grant will go towards financing the Government's budget, including expanded safety nets and public works programs to help cycle and provide seeds and fertilizer for the coming planting season. It will also allow Government to reduce domestic debt levels and maintain spending levels in line with the targets of the International Monetary Fund's recently approved Poverty Reduction and Growth Facility program. "The Government has taken a proactive approach to managing a difficult situation in Malawi," noted Goodall Gondwe, Malawi's Finance Minister, "and the World Bank has been a steadfast partner from the beginning. The $30 million Emergency Recovery Project will provide vital support to the Government's implementation of its program to prevent hunger and help ensure a successful harvest in the coming planting season."

Malawi is one of the countries in Southern Africa most affected by drought this year, and its agricultural production has fallen by seven percent compared to the previous year. The maize crop for 2005 has been hit especially hard and is estimated to be almost 30 percent lower compared to last year, itself a shortage year, resulting in the worst maize season in ten years. The failure of the maize crop is of particular concern for food security as maize is the main staple food in the country. (World Bank, Washington)

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