Donors offer Goodall no respite over budget funding
The country’s development partners and traditional donors have offered no hints on when the direct budget support will resume despite Finance Minister Goodall Gondwe’s optimism that a few will return within the 2015/16 financial year.
Gondwe told Parliament on Friday, during National Budget presentation, that global trends indicate increased donor fatigue was leading to reduction of budget support to several poor nations by many western countries.
Gondwe also acknowledged that the infamous Cashgate—the theft of over K24 billion taxpayer’s money by public servants, businesspersons and politicians uncovered in 2013, which attracted global notoriety—has worsened and complicated Malawi’s position with its development allies.
Gondwe told Parliament: “The 2015/16 budget does not have budgetary support from our development partners. The AfDB has, however, taken a decision to disburse budgetary support during the 2014/15FY.
“The EU and the World Bank may also resume budgetary support to Malawi during the 2015/16FY and should that happen, the resources will be used to procure additional vehicles for the Malawi Police Service.”
But, in separate interviews, EU head of delegation Marchel Gerrmann and World Bank country representative Laura Kullenburg refused to share Gondwe’s optimism on budget and ruled out resumption either.
Said Gerrmann: “Our position has not changed as it has been over the last couple of years, the option of budget support remains on the table. It is important that we see progress in the reforms and macro-economic stability first.”
Kullenburg also said there was no timeframe for budget resumption but she acknowledged that more signs of prudent management of resources could sway the donors to resume aid.
“The budget support remains an instrument in our portfolio; it is in our country programme. The criteria for budget support are based on a set of very strong policy reforms, public financial management, public sector reforms. A number of them have been launched, we are pleased these have been launched, but we need to see progress,” said Kullenburg.
In his speech, Gondwe said despite the absence of budgetary support, EU and other development partners continue to provide the biggest chunk of off-budget development funding.
He noted that while budgetary support is dwindling, off-budget development support from development partners was increasing.
“It is important, therefore, that the analysis of the budget should take into account this structural change,” he said.
Donors have generally welcomed the 2015/16 National Budget with EU, World Bank and IMF describing it as pragmatic, balanced but with little room for mistakes.
The majority of the traditional donors have, among others, called for the review of the fertiliser subsidy programme as government seeks to cut on expenditure.
So far, AfDB has committed budgetary support since the majority of donors suspended aid in the aftermath of the Cashgate scandal, forcing Gondwe to implement a zero-aid budget in 2014/15 financial year.
The development has led Gondwe to make several cuts to Treasury’s estimated expenditure programme, which local experts warn may hurt the poor, while some donors say it is necessary to keep balance in allocation and recurrent budgets.
