Donors hold on to budget support
Condemn cuts in line ministries
Malawi’s major donors under the Common Approach to Budget Support (Cabs) yesterday bemoaned the drain of resources in line ministries which they say has negatively affected social spending.
During a joint Cabs review meeting with government at the Bingu International Conference Centre (BICC), there was also no commitment by the donors to resume budget support towards the 2013/14 national budget that expires on June 30 this year following the withholding of about $150 million (K61 billion), a decision announced in November 2013.
“Line ministries are being drained of resources and social spending to reach the poor seems to have been negatively affected. This is of great concern to Cabs donors and development partners at large as our expectation has been that government prioritised social spending when making the necessarily cuts to its expenditures,” said Cabs co-chairperson Alexander Baum in his address.
Baum, who is also head of the European Union (EU) Delegation, also said the social costs of Cashgate, as the plunder of public resources at Capital Hill has been named, have become apparent as service delivery on the ground has seriously declined “and this should not leave us untouched.”
He also took a swipe at government that since the International Monetary Fund (IMF) Executive Board concluded the third and fourth reviews, Lilongwe has been ‘reluctant’ to fully use the additional margin it received under the revised Extended Credit Facility (ECF) to increase temporarily domestic borrowing to finance essential expenditures.
Commenting on the economic environment, Baum described as “remains very fragile” saying the challenges to public finance management and the follow up to Cashgate scandal are ongoing while national elections are fast approaching.
Baum also said the first quarter of the current fiscal year 2013/14 showed a weakening of the fiscal policies as fiscal targets, notably on expenditure and domestic borrowing exceeded the targets.
Later, when asked by The Nation to explain the future of the withheld budget support, Baum simply said: “The possibility of resuming budget support is still under the table and every development partner will have to make own judgements.”
On his part, Minister of Finance Maxwell Mkwezalamba said in a space of four months since the last review meeting was held, government has confidence that it is possible to have sound Public Finance Management Systems in Malawi.
Cabs donors withheld their budget support following revelations of plunder of public resources at Capital Hill which was exposed following the shooting of then Minister of Finance budget director Paul Mphwiyo at the gate of his Area 43 residence in Lilongwe on September 13 last year.
