By IPS Correspondents
BLANTYRE, Nov 3 2006 (IPS)

Malawi’s compliance with the requirements of the Heavily Indebted Poor Countries (HIPC) initiative has opened the door to a commitment by Ireland to increase aid to the Southern African country.

Over the next six years, Dublin will allocate a yet-to-be agreed amount of money to Malawi out of a total amount of about 1.9 billion dollars which has been set aside for nine developing countries.

Ranked 165 on the United Nations Human Development Index, Malawi is one of the poorest countries in the world with a per capita income of less than 160 dollars.

Malawi is the sixth country in Africa to be targeted for Irish aid – after Zambia, Lesotho, Mozambique, Tanzania and Ethiopia.

Ireland is committing itself to deepening its support for Malawi as part of a decision to double its official aid expenditure by 2012. This year, Ireland spent almost 937 million dollars on official assistance.

Irish President Bertie Ahern recently declared 2012 as the year in which his country intends to reach the United Nations target of spending 0.7 percent of gross national product on official aid. This is ahead of the European Union’s target date of 2015.

The debt cancellation deal comes after Malawi reached the completion point under the HIPC initiative, in which rich countries agreed to cancel some of the poorest countries’ debt if they complied with certain policy prescriptions.

The International Monetary Fund (IMF) and the World Bank cancelled the bulk of Malawi’s 2.9 billion dollars worth of external debt in September.

According to the IMF, the debt cancellation was approved because the government of ex-economist and now Malawian president Bingu wa Mutharika “established a solid track record of good policy implementation”.

“Overall, this has resulted in strengthened public finances and improved macroeconomic performance,” said Calvin McDonald, IMF mission chief in Malawi, in a press release.

As a result, Ireland’s honorary counsel in Malawi, Sean O’Neill, proclaims that Ireland “is confident enough to start disbursing aid directly to the country’s central government, which is not what was happening in the past”. O’Neil is also a banker at Malawi’s First Merchant Bank.

Previously, assistance was channelled through non-governmental organisations (NGOs). Irish aid started flowing to Malawi during the food security crisis of 2002. Since then, Ireland has spent just under 23 million dollars on emergency relief and a recovery programme in Malawi.

According to O’Neill, “Malawi will now become a programme country, meaning that the Irish government will prioritise Malawi in providing long-term, sustainable and predictable aid – unlike in the past when we were just responding to specific needs.”

Head of policy at the NGO Action Aid, Collins Magalasi, has a high regard for the Irish approach to aid, as the aid provision is flexible in its objectives.

“The Irish will allow us to initiate ideas so that we can utilise their money to address problems that we know. Other donors are rigid, dictating what we should spend their money on,” said Magalasi.

The Irish government commits itself in a white paper on aid to “address the causes of poverty and not simply the symptoms. We aim to build systems that tackle poverty in a way that endures, long after our interventions have ceased. Our ultimate objective, as donors, is to make ourselves redundant.”

Previously, donors looked askance at Lilongwe’s overspending. Equally questionable was the former administration’s perceived poor governance record. A question mark still hangs over former president Bakili Muluzi’s personal fortune, amassed during the 10 years of his rule.

In the courts, the former head of state is accused of diverting millions of dollars from various donors into his personal account.

Against this background, what assurance is there then that aid from Ireland and other donors will not go down the drain? Mutharika has vowed to continue improving control over public finances.

According to him, the “sacrifices and hardships” that have been endured to achieve the HIPC completion point were necessary in order for Malawi to move forward. “And we’re definitely moving forward,” said Mutharika.

Finance Minister Goodall Gondwe, himself a former World Bank employee, is equally reassuring. “The good thing with the Irish aid is that it will come at a time when increased resources are available in the budget, unlike in the past. This should increase our ability to provide social services to the masses”.

The country’s woes have been exacerbated by an AIDS pandemic, which has cut life expectancy to 37 years, and a continued reliance on agriculture. Most of Malawi’s 12 million people make a precarious living as subsistence farmers.

Figures from the Joint United Nations Programme on HIV/AIDS put adult HIV prevalence in Malawi at 14.1 percent.

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