The IMF on Wednesday expressed concern about the recent K15 billion (about $60 million) MRA â€˜borrowingâ€™ scandal and recommended that the public tax collector should start declaring its revenue collections publicly.
The International Monetary Fund (IMF) also announced that Malawi and the fund agreed on a new funding programme and that Western donors are expected to pump in about $200 million (about K50 billion) in Balance of Payments (BoP) support for the 2012/13 national budget.
Briefing journalists in Malawiâ€™s capital, Lilongwe, IMF mission chief to Malawi Tsidi Tsikata said they discussed the issue of data integrity following the recent revelation that the Ministry of Finance inflated revenue data reported to Parliament early this year.
“The mission recommended that henceforth, the Malawi Revenue Authority [MRA] report information on its monthly revenue collections directly to the public and not just to the Ministry of Finance,” Tsikata said. “We are concerned about what happened.”
Tsikata also announced that IMF and Malawi agreed to a three-year $157 million package to support the troubled economy. This is twice the level of support in 2010. He said the new arrangement is subject to approval by the IMFâ€™s Executive Board next month.
Aid-dependent Malawi has been in a tail-spin for more than a year after former president Bingu wa Mutharika picked fights with donors whose aid traditionally accounts for 40 percent of the national budget.
The aid cut coincided with increasing challenges in selling the countryâ€™s main foreign exchange earner, tobacco.
Mutharika died in April of heart attack and new President Joyce Banda has tried to repair the damaged diplomatic ties and have the aid taps re-opened.
Under the new programme, the IMF will replace $79.4 million facility approved in 2010 that was suspended due to problems with Mutharika, who scoffed at the fundâ€™s recommendations to devalue the kwacha, reform the finance sector and increase transparency.
Tsikata expressed concern over significant and growing risks to public finances from the operations of State-owned enterprises and the setting of prices and tariffs below cost recovery levels.
Said Tsikata: “In this regard, the mission welcomed the recent changes to the pricing and taxation of petroleum products and the adoption of an automatic adjustment mechanism to ensure that retail prices of these products reflect the true cost of importation…”
Lipenga, who later presented the budget to Cabinet chaired by Vice-President Khumbo Kachali, said he is happy with the new programme and expressed governmentâ€™s commitment to expenditure cuts if the countryâ€™s economy is to be restored.