Minister of Finance, Economic Planning and Development Goodall Gondwe has blamed “some donors in Lilongwe” of influencing the World Bank to continue withholding about K60 billion ($80 million) in budget support to Malawi.
In an interview at his Capital Hill office in Lilongwe yesterday, the minister described the World Bank’s withholding of the funds as “a case of changing goal posts” as, he said, the World Bank was convinced that Malawi had implemented the agreed preconditions for releasing budget support in the 2018/19 budget.
Said Gondwe: “We have completed all the actions that we agreed [with the World Bank]. The one that they are, and it’s not them [World Bank]… It’s the donor community in Lilongwe which would like us to implement some of the reforms that are needed in Admarc.
“In as far as the [World Bank] staff are concerned, they feel that we have done what we agreed, that is to appoint a consultant to study and recommend what reforms should be conducted in Admarc. We have done that.
“But the board of directors [of the World Bank], influenced by people [some donors] from Lilongwe, are saying don’t just stop at recommending reforms. Do them before disbursement of funds.”
With his Cabinet colleague Joseph Mwanamvekha at Ministry of Agriculture, Irrigation and Water Development, they are assessing how they can implement the reforms at Agricultural Development and Marketing Corporation (Admarc) before meeting the World Bank board of directors in Washington DC.
Said Gondwe: “The reforms can be done. I think we will do them. We will discuss the matter more in-depth with the World Bank in Washington.”
The minister was reacting to a position outlined by World Bank country manager for Malawi Greg Toulmin who, in a written response to a questionnaire from The Nation, said that the bank continues to work closely with Malawi Government to ensure that ‘phase two’ actions are fully implemented before releasing the funds.
He said a two-part budget support operation for Malawi, formally the Agricultural Support and Fiscal Management Development Policy Operation, was approved by the Word Bank in May 2017.
Toulmin added that as part of the operation, the World Bank and Capital Hill agreed on a set of actions in agriculture and fiscal management that needed to be completed in two phases before the financing was released.
Said the World Bank country manager: “Phase 1 [for $80 million], was released in August 2017.”
Economics Association of Malawi (Ecama) said it was worried with the growing pressure arising from the delayed budget support disbursements.
In an interview yesterday, Ecama executive director Maleka Thula feared that the situation will not only heighten fiscal pressure on account of reduced domestic revenue, but also has several negative implications on the country’s Balance of Payments (BOP)—a record of all transactions for Malawi with the rest of the world.
He observed that in Malawi, donor funds help in anchoring the movement of the kwacha against foreign currencies especially during the lean season.
“Not delving into whether the conditionalities of the support were met or not, generally the view is that persistent decline and unpredictability of budget support makes budget implementation somewhat difficult.
“More especially, development budget suffers the downward adjustments in events that actual revenue is lower than projected,” said Thula.
Due to the non-disbursement of the World Bank’s budget support, Gondwe was forced to trim allocations to some ministries, departments and agencies (MDAs) in the national budget during the Mid-Year Budget Review in February.
In an earlier interview with The Nation in January this year, Gondwe said Cabinet had not met to discuss proposed Admarc reforms, since they would be undertaken by the government that will be formed after the May 21 2019 Tripartite Elections.n