Donors hint at budget support
The European Union (EU) and the World Bank have asked Malawi to meet 20 conditionalities if they are to resume direct budget support, Minister of Finance, Economic Planning and Development Goodall Gondwe told Parliament on Wednesday.
Presenting a statement on the State of the Economy in Parliament, Gondwe said chief among the conditions from the two Western institutions is the tabling of the Access to Information (ATI) Bill, elimination of ghost workers in the public service and reforms in the Farm Input Subsidy Programme (Fisp).
Said Gondwe: “A large number of conditions have been agreed which we will have to satisfy before they can disburse the budgetary support that has been pledged.
“For example, the two institutions require, inter alia, that we should have presented to Parliament the Access to Information Bill as well as implement reforms relating to the wage administration that will eliminate the ‘ghost workers’ in the system.”
On Fisp, Gondwe said the donors have stressed that the country should completely reform the subsidy programme so that half of the fertiliser is sold through the private sector instead of State agencies, notably Smallholder Farmers Fertiliser Revolving Fund of Malawi (SFFRFM) and Agricultural Development and Marketing Corporation (Admarc).
Additionally, the minister told the House that the kwacha currency was still facing turbulent times, adding government needs strong adjustments to the situation.
However, Gondwe admitted that coupled with high inflation rates, the macroeconomy of the country is not stable.
He said as a result of the diminishing budgetary revenue following the donor pull-out in October 2013 owing to concerns of Cashgate—the plunder of public resources at Capital Hill, Lilongwe was reducing expenditure with cuts targeting less essential expenditures.
Said Gondwe: “Clearly, the IMF [International Monetary Fund] verdict that its programme is off-track beacons the need to take further measures to reduce budgetary expenditures urgently and to exercise caution in the management of resources. Future budgets will have to discriminate less essential expenditures.”
The World Bank and EU alongside other Western financial institutions and bilateral donors suspended direct aid to Malawi over widespread concerns over massive theft of public money and have called for improvement of the public finance management system.
On the other hand, while the ATI Bill has become another key demand aimed at improving good governance and transparency, the current administration following footsteps of several predecessors, has delayed to bring the bill to Parliament, angering the media and civil society groups.
This week, media groups challenged President Peter Mutharika to pass the ATI Bill or make public the so-called inconsistencies in the bill as reportedly noted by his Cabinet last week. n
