As the 2017/18 National Budget paints a rosy picture of donor-come back for direct budget support due to improved public financial management, major donors have expressed concern with widespread corruption in the public service.
The donors were reacting to the budget statement presented in the august House in Lilongwe by Finance Minister Goodall Gondwe yesterday.
In the statement he delivered yesterday in Parliament, Gondwe boasted about the coming back of some donors to support the budget, after they had pulled out following revelations of massive plunder of public resources widely known as Cashgate in 2013.
He said the completion of the International Monetary Fund (IMF) of the Extended Credit Facility (ECF) Programme and the approval of a new programme a month ago, is an indication that economic management has attained the desired goal.
“Moreover, the World Bank returned with budget support during the current financial year and it is due to disburse another one in the early part of the next financial year. It is also expected that the EU could approve budget support for Malawi in the course of the 2018/19 fiscal year.
“The return of these two institutions also shows that our public finance management reforms have reached an acceptable stage and that the government is on course to recreate a conducive macroeconomic framework in which robust growth can occur,” he said.
But in an interview yesterday EU Ambassador Marchel Gerrmann said the impression that the EU will soon resume direct budget support was wrong. He stressed that Brussels remains willing to support the budget if government meets the agreed set standards. The EU envoy also expressed disappointment with persistent corruption in the public sector, citing poor procurement systems as a cause for concern.
“We need to see progress on those areas and once that progress is there, and if the government can maintain macroeconomic stability, we would be willing to resume budget support. But we are not there yet and from that perspective it would have been prudent for the minister not to include the EU budget support in the budget,” Gerrmann stressed.
The UK has also ruled out any possibility of resuming direct budget support.
In an interview yesterday, British High Commissioner Holly Tett said London will continue supporting Malawi off budget. She, like the EU also urged Capital Hill to ensure fiscal prudence in view of the forthcoming elections.
“There is still a huge problem with corruption. We are also quite aware of a number of corruption cases which often pass through our desks and this highlights that the problem is not yet addressed,” said Tett.
Government has earned donor applause for achieving macroeconomic stability, citing low inflation and foreign reserves as steps in the right direction. The donors also noted with pleasure the focus on youth empowerment.
Malawi Confederation of Chambers of Commerce and Industry (MCCCI) chief executive officer Chancellor Kaferapanjira poured cold water on the proposed 2018/19 financial blueprint, saying it is less inspiring for the growth of the private sector which is key for economic growth.
He said it is surprising that the financial blueprint has not mentioned anything about the persistent power outages facing the country, which is significantly affecting the economy.
“We have been complaining about electricity and there was literally nothing said about what government is going to do about electricity. You will recall that the minister said what government is working on will only come into reality in 2021. Who will wait up to 2021 when we know that businesses are shrinking due to lack of electricity and there is no immediate attention to this?” wondered Kaferapanjira.