Barely 24 hours after telling Parliament that government expects additional budgetary support from the European Union (EU), Treasury czar Goodall Gondwe has clarified that the EU did not make any pledges.
Additionally, the Finance Minister has also moved away from his earlier position as he also previously announced in Parliament that the EU had set the passing into law of the Access to Information (ATI) Bill as one of the preconditions for the return of direct budgetary support.
Gondwe told Parliament during Friday’s Mid-Year Budget Review Statement that Treasury ‘expects’ EU to release $20 million (about K15 billion) for direct budget support while on the issue of the ATI, he twice addressed the House, indicating that ATI was one of the conditions government had to meet to qualify for aid.
During Friday ’s address, Gondwe said apart from the EU, the World Bank in particular, has expressed publicly its confidence that their earmarked amount of $80 million as budgetary support could be disbursed this financial year “assuming all their conditionalities would have been achieved”.
“We also expect the European Union to disburse an amount of more than $20 million. This will be on top of some budget support that has already been provided by the African Development Bank.
We also expect that the IMF will disburse more than $20 million when they complete their ninth review of the Extended Credit Facility (ECF) within this financial year,” said Gondwe.
But in an interview yesterday, the minister moved to clarify that the EU had not confirmed it will release budgetary support and also admitted that the EU never discussed with government on whether ATI was a condition for budgetary support.
Said Gondwe: “There are so many conditions that I cannot really tell. I said possibly they will resume aid. The World Bank, we are more certain, but not the EU. We didn’t have special discussion on the issue of ATI, but it was one of the conditionalities for budgetary support.”
The minister’s contradictions on the issue will raise more questions as Treasury has just been forced to revise downwards the current budget by K20 billion due to failure by donors to meet certain pledges.
But speaking this week, EU Ambassador Marchel Germann while congratulating President Peter Mutharika on assenting to the ATI, said the EU never set the passing of ATI as a pre-condition for aid.
In November 2015, Gondwe told Parliament that the EU and the World Bank were ready to inject billions of crucial direct budget aid if the country meets 20 conditions the two institutions have demanded.
Presenting a statement on the state of the economy in Parliament, Gondwe said chief, among the conditions from the two institutions, was the tabling of the Access to Information Bill, elimination of ghost workers plus reforms in the Fertiliser Input Subsidy Programme (Fisp).
“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 ‘ghost workers’ from the system,” said Gondwe.
The World Bank and the EU, alongside other western financial institutions and bilateral donors suspended direct aid to Malawi over widespread concerns about massive theft of public money and have called for improvement in the public finance management system.