	Recent Developments

Political challenges facing Malawian President Joyce Banda have mounted in recent months, following a brief political honeymoon after she succeeded Bingu wa Mutharika, her predecessor, after he died in April 2012. These events followed socioeconomic protests and a civil service strike in early 2013. The protests were a reaction to cost-of-living inflation in the 30% range triggered by Banda's 2012 devaluation of the national currency, the kwacha , by 50%; a fuel price liberalization; and other policy decisions aimed at reversing various controversial policies pursued by Mutharika. Introduction

President Barack Obama's Administration and a number of Members of Congress welcomed President Banda's accession to power, primarily because she has sought to reverse a number of contentious decisions taken by her predecessor. Banda, Africa's second female president, has also won plaudits as an international advocate for women's rights; her tenure has been seen as a sign of increasing gender equality in a region where male leaders have predominated. Banda's anticipated White House meeting followed an August 2012 trip by then-Secretary of State Hillary Clinton to Malawi to discuss economic and political governance and reform and bilateral development cooperation projects. Banda also participated in two high-level USAID development conferences in 2012 in the United States, and in September 2012 addressed Members of Congress at a forum on U.S.-Malawian and broader U.S.-African ties. U.S. Relations and Congressional Role

U.S. bilateral engagement focuses primarily on the promotion of socioeconomic development and growth, democracy, and good governance. Such ties had been severely damaged during Mutharika's second term over concerns related to economic management, undemocratic governance trends, and his increasingly acrimonious stance toward donors. Several key donors reinstated aid that they had withdrawn or restricted during Mutharika's tenure, a welcome prospect for Malawi's flagging economy. Such donors included the U.S. Millennium Challenge Corporation (MCC). Banda: Succession and Administration

Banda took office after Mutharika died of a reported heart attack, on April 5, 2012, while serving an increasingly contentious second term; Banda was vice president at the time of his death and therefore succeeded him. Banda has also sought constructive ties and cooperation within Africa, although there have been some indications that the Banda government may pursue a foreign policy at odds with some of its African peers but potentially aligned with selected U.S. regional policy goals. Political Background

Malawi, a former British colony, is a small, poor, mostly agricultural developing country in southeastern Africa. Economy and Development22

Diverse challenges confront President Banda in managing the stumbling economy she inherited from Mutharika. In the long run, the devaluation is intended to bring parity to the official and black market currency exchange rates, and provide market incentives to spur greater domestic production and export of crops like tobacco and sugar. Sound economic policies. Key U.S. bilateral assistance goals in Malawi include increased food security and agricultural growth; poverty reduction; and stronger institutions to ensure effective social service delivery. State Department- and U.S. USAID-administered bilateral assistance to Malawi totaled over $172.6 million in FY2011 and stands at an estimated $166.7 million in FY2012. The Obama Administration has requested $145.8 million for FY2013. The recent arrests of key former opposition officials on charges of treason relating to efforts to prevent Banda from succeeding Mutharika have also sparked protests and energized ongoing acrimony between the opposition DPP and the Banda administration. Malawi's relations with donors also deteriorated due to a combination of factors.
President Barack Obama's Administration and a number of Members of Congress welcomed Malawian President Joyce Banda's accession to power, largely because she reversed a number of controversial decisions taken by her predecessor, Bingu wa Mutharika. Banda succeeded him after he died in early April 2012 while serving a contentious second term. Banda's status as Africa's second female president, an internationally recognized women's rights advocate, and a leader with socioeconomic development expertise has also attracted U.S. and other international support for her. There are some indications that Banda may pursue a foreign policy aligned with selected U.S. regional policy goals, and in March 2013, President Obama invited Banda to the White House to discuss democratic strengthening, trade, and investment. In August 2012, then-Secretary of State Hillary Clinton traveled to Malawi to discuss economic and governance reforms and to highlight U.S.-funded development projects. In September 2012 Banda addressed a gathering of Members of Congress at a forum on U.S.-Malawian and broader U.S.-African relations.
Malawi, a former British colony, is a small, poor southeastern African country that underwent a democratic transition from one-party rule in the early 1990s and has long relied on donor aid. Under Mutharika, however, Malawi's ties with donors had been damaged over concerns related to economic management, undemocratic governance trends, and Mutharika's acrimonious stance toward donors. Upon taking office, Banda—who had served as Mutharika's vice president and therefore succeeded him upon his death—initiated a series of economic and governance reforms, aimed at rescinding changes made under Mutharika. In response, most donors that had suspended aid under Mutharika reinstated it, a welcome prospect for Malawi's flagging economy. Such reinstated aid included a U.S. Millennium Challenge Corporation (MCC) compact.
Key donor-backed policy changes made by Banda have included a devaluation of the national currency, the kwacha, and efforts to repeal several controversial civil and political rights laws passed under Mutharika. She also set out a number of policies designed to spur socioeconomic development and growth, gender equality, and respect for human rights, and supported fiscal austerity measures, including budget cuts affecting the presidency. Banda faces interlinked economic and political challenges arising from her management of the faltering economy she inherited from Mutharika. Her decision to devalue the currency was intended to foster free-market processes in the long run in order to spur greater production for local and export markets and boost macroeconomic stability, among other ends. In the short run, however, it has sharply driven up inflation, including for fuel and food, sparking public protests and labor strikes. In addition, some donors have released aid funds more slowly than initially anticipated or have imposed new aid policy conditions. Banda also faces rifts within her own party and faltering parliamentary support. The recent arrest of several former Mutharika officials on treason charges related to a plot to prevent Banda's constitutional accession to the presidency has also caused controversy.
In addition to a $350 million, five-year MCC compact, the United States provides significant bilateral aid focused on food security and agricultural growth; poverty reduction; health and education; economic growth; and democracy and good governance. State Department and U.S. Agency for International Development (USAID)-administered bilateral assistance to Malawi totaled over $173 million in FY2011; an estimated $167 million in FY2012; and $146 million in requested funds for FY2013.