APM begs for donor mercy

President Peter Mutharika has lobbied parliamentary committees in the United Kingdom (UK) to push the British government and, by extension, other donors to resume direct budget support to Malawi.

Mutharika, currently in the UK, made the plea during meetings with the committees in London on Monday.

In his address, the President outlined several reforms his administration is implementing to regain lost confidence from development partners who withdrew their 40 percent contribution to Malawi’s national budget in October 2013 amid concerns of Cashgate — the plunder of public resources at Capital Hill.

He said: “Honourable members, let me confess that after my government, led by the Democratic Progressive Party [DPP], came to power on 20 May 2014, our joy and celebration was short-lived because we were jolted by a painful shock when it dawned on us that our long-established development partners, including the UK, had suspended direct budget support to our country as a reaction to the massive looting of public funds by some civil servants, colluding with other suspects, to defraud government of huge sums of money, [notoriously] known as Cashgate.

“This suspension of direct budget support, therefore, translated into an immediate cut of the support to Malawi’s budget by over 40 percent which for a country like ours is a very big cut to the country’s budgetary requirements.”

Britain, on the other hand, suspended its aid to Malawi in 2010 over concerns of lack of financial prudence by the previous DPP administration led by former president the late Bingu wa Mutharika.

This was after the DPP administration had bought a presidential jet and top-of-the-range luxury vehicles for Cabinet ministers with funds perceived to be from donors.

In his address on Monday, Mutharika said his administration has put in place strict measures to restore discipline in financial management and win back the donors trust.

He said, among others, his government managed to come up with a Cabinet size of 20, embarked on a wide range of public sector reforms to achieve efficiency and effectiveness in the public service and taken steps to seal loopholes to avoid a repeat of Cashgate.

With the Malawi Revenue Authority (MRA) missing its revenue collection targets, it means that even the last hope of survival is crumbling on the back of a deteriorating macroeconomic environment that has left private sector activity—the major source of public finances—severely depressed.

The Mutharika administration has banked its hopes on reforms to win back confidence.

In April this year, Mutharika outlined Public Finance Management Reforms which, among others, included reformation and revival of Central Internal Audit Services as a compliance tool.

However, in an interview with The Nation at the time, International Monetary Fund (IMF) resident representative Geoffrey Oestreicher described the action plan as a strong commitment whose test stood in implementation.

Said Oestreicher: “This is an appropriate response to concerns of Public Finance Management and if properly implemented, they can address the concerns that are there about public finance management.”

Malawi’s public finance management has been rocked by reports of abuse of funds with the Directorate of Public Prosecutions (DPP) at one time proclaiming that about 30 percent of resources allocated in the national budget went into people’s pockets.

In 2013, the shooting of former Ministry of Finance budget director Paul Mphwiyo led to revelations of the plunder of public resources at Capital Hill.

Former president Joyce Banda ordered an audit which British forensic auditor, Baker Tilly, undertook between April and September 2013 and established that about K24 billion was siphoned from public coffers through dubious payments, inflated invoices and goods or services never rendered.

In May this year, a financial analysis report by audit and business advisory firm PricewaterhouseCoopers (PwC) also established that about K577 billion in public funds could not be reconciliated between 2009 and December 31 2014.—Malawi News Agency/The Nation