The European Union (EU) has released K 17 billion as budgetary support to Malawi.

This is the first tranche of a total of K40 billion that EU is to give Malawi in three years under the financing agreement for the Good Governance and Development Contract.

In a statement released on Wednesday, EU Press and Information Officer to Malawi Christophe Legrand said this follows the agreement signed between the EU and Malawi on November 21 this year.

“This first tranche was scheduled for disbursement during the current 2012/2013 financial year in support to the government’s efforts to stabilise the economy [and] it represents the first disbursement under a three year good governance and development contract budget support programme.

“The disbursement also provides a significant injection of foreign exchange at the time when the country suffers from very low levels of reserves,” Legrand says in the statement.

The statement further says the contract, ending in the 2014/2015 financial year, aims to help Malawi reach its poverty reduction objectives through the implementation of the Malawi Growth and Development Strategy II and the Economic Recovery Plan.

“It [the disbursement] will support Malawi’s macroeconomic stability and provide the Government with the financial means to implement poverty reduction programmes for the benefit of the people of Malawi,” reads the statement in part.

The disbursement follows the successful first review mission of the International Monetary Fund under the new three-year Extended Credit Facility (ECF).

It constitutes an acknowledgement on the part of the EU of the progress that Malawi has made in stabilising the challenging macro economic situation.

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