Announcement of Consultative Group Supports Malawi's Poverty Reduction Strategy on May 16, 1990

t 'tU. ( ..J O l,,o oo I PRESS RELEAS~ For Immediate Release CONSULTATIVE GROUP SUPPQ PARIS, May 16, 1990-·The third meeting o the Consult•tive Gro~p for Malawi was held on May 14, 15 and 16 in P•ris u der the Chainnanship of Mr. Sven Sandstrom, Director, Southern Afri¢a Dep ,rtment of the World Bank. The Malawi · delegation was led by the H$norab e L. J. Chimango MP, Minister of Finance . The Consultative Group commend d the Government of Malawi for the continued successful iwplemsnt•tion fits adjustment program and the development and initiation of a strategy to deal with its medium •nd long term development challenges. Despite an impressive growth record since its independence in 1964, Malawi still has a very low annual per capita income amounting to only US$170 and low eocial ndicators. The Government has therefore developed a poverty reduction trategy that will also contribute to economic growth. This strategy focuses on incre sing the employment opportunities of the poor; raising the productivity of the smallest farmers; increasing the share of expenditures going to human capital formation; and d•veloping selected income transfer mechanisms for he poorest in soci•ty, The donors expressed support for this strategy and ·g~eed that it would require a shift in the modalities of financing . T e~e was agreement on the need to improve the consultation process b~tween the Government and the donors in order to harmonize donor programs with t e Government's public expenditure priorities. In the short run an increas would be required in funds going to recurrent expenditures, especially to education, he$lth, agriculture &nd road maintenance . Rapid population growth ~as si gled out as one of the major factors undermining efforts to reduce po erty and increase per capita incomes, and it was agreed that a ~trong population policy was needed. The Malawi delegation outlined a number of a tions that are being taken to deal with the issue, including improving ~cce s of women to education and employment opportunities. The Consultative Group e~phasi .ed the need for th~ Goverrunent to create an environment that encouraged in reased private initiative in the econo my, especially for small and medium sized enterpri5e5. The Government reiterated that it would welcome a broad r spectrum of participants in the  1'1U. I...JU 2 development process, including domestic nd international non-gov~rrunent organizations, and its intention to dece tralize Goverrunent functions to local communities. A special session was held on he extraordinary cost~ that Malawi is facing with regard to the reop ning of the Nacala rail line, and the continuing care of a large refugee p pulation in the country. The meeting endorsed the plans for reopening ·and rehabilitating the rail line to Nacala to reduce the freight costs of moving goods io and out of Malawi, The donors noted continuing concern abou · security on the line and welcomed increased efforts by both Mozambique and Malawi to provide increased protection to construction crews and tra _ns. Donors •greed to look at the requirements for increased funding forte Nacala rail line; it is a priority investment in the SAPCC investm nt program through which considerable funding should be available The Malawi delegation and the nited Nations ttigh Comm1$s1on for Refugees presented an appeal for increas d donor support to offset some of the costs that Malawi has incurred in ca :1ng for over 800,000 ref~gees, a figure equal to 10 percent of its ~wn po ulation. It was noted that a meeting would be held in July in M~lawi o consider in detail this program and how it would be funded. The meeting agreed that total xternal resources of about $1 . 2 billion will be needed over 1990-95 for alawi to continue economic growth and implement successfully its poverty r auction progr$lll, Indications given at the meeting confirmed that the inancing requirement in 1990 and 1991 of $508 million had been met, with significant portion of this in the form of quick disbursing balance of ayments 5upport under the Special Progr~m of Assistance for Debt-Distresse , Low-Income Countri~s in Sub- Saharan Africa . Significant progress ha al5o been made in meeting requirements for the following three yeas. The meeting was attended by de egates from C•n~da, France, Germany, Japan, the United Kingdom, the nited States, the African Development Bank, the Commission of Euro ean Communities, the European Investment Bank, the International Monet ·ry Fund, the United Nations Development Programme, and the United Na · ions High Commission for Refugees. Observers from Denmark, Italy and the or ·anization for Economic Cooperation and Development and the United Nations C ildren's Fund were also present.