Department for International Development
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Government to suspend general budget support to Malawi

Malawi will no longer receive general budget support from the UK Government, Andrew Mitchell announced yesterday.

The International Development Secretary took the decision after the Government of Malawi repeatedly failed to address UK concerns over economic management and governance.

General budget support, which is used to allow governments to deliver their own national strategies for poverty reduction against an agreed set of targets, has been suspended indefinitely.

On governance, demonstrations have been suppressed, civil society organisations intimidated, and an Injunctions Bill passed that would make it easier for the Government to place restrictions on opponents without legal challenge.

On the economy, the UK is concerned that Malawi’s overvalued exchange rate has created chronic foreign exchange shortages which are having a serious impact on the Malawian private sector’s ability to drive future growth. There are now daily fuel queues, tobacco exports have deteriorated and Malawi is off-track with its IMF programme.

The Development Secretary’s decision is in line with international concern over Malawi’s current position. The World Bank, the European Union, the African Development Bank, Germany and Norway have all suspended or ended general budget support to Malawi.

Andrew Mitchell, Secretary of State for International Development, said:

"The UK provides development assistance in order to help communities lift themselves out of grinding poverty, whether that’s through getting children into school, ensuring women survive childbirth or helping farmers grow enough food to feed their families and communities.

"But poor people in Malawi and British taxpayers alike have been let down. In these circumstances I cannot justify the provision of general budget support for Malawi.

"In the meantime we will use other means to ensure that programmes to protect poor Malawians, amongst the poorest people in the world, and deliver basic services like health and education are able to continue.

"The UK has a long and deep commitment to the people of Malawi and we are keen to see the country resume the good progress it has made in recent years. I remain willing to reconsider our approach as and when our concerns are addressed."

The UK has helped improve food security in Malawi for over seven million people a year by providing them with high yielding maize and legume seeds via the Farm Input Subsidy Programme.

UK support to strengthen the health service has helped save the lives of 3,200 pregnant women and 40,000 children since 2004. UK funding has built over 3,200 primary school classrooms and 4,800 toilets since 2001, helping keep more girls in school.
This comes as the Government reduces general budget support across the world by 43% and tightens up the principles on which budget support agreements are made.

All budget support is tightly monitored against a strict set of expected results and can be reviewed by the Independent Commission for Aid Impact at any time.

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