Malawi Government is still engaging the Common Approach to Budget Support (Cabs) donors and has expressed optimism that they would resume budget support for the 2014/15 fiscal plan.
The donors have since November last year been withholding budgetary support amounting to $150 million after revelations of looting of public funds dubbed Cashgate under the People’s Party (PP)-led administration which lost in the May 20 Tripartite Elections.
“As of now, we have not received any confirmation in the course of our budget formulation. We will still engage them and hope they will rescind their decision,” said Nations Msowoya, Treasury spokesperson in an interview with Business Review this week.
Msowoya was asked to comment on whether government still assumes zero budget support as reported earlier in March this year in Lilongwe during a Cabs review meeting.
The zero budget support assumption was premised on the fact that Cabs donors had frozen budget support to Malawi during former president Joyce Banda’s administration after being vexed by revelations of Cashgate.
The assumption, however, prompted some local economic commentators to speculate that the then government had planned to revert to the infamous zero deficit budget which characterised the financial year 2011 and championed by former president the late Bingu wa Mutharika following disagreements with major donors.
Currently, the withholding of budget support still remains one major risk to Malawi’s projected economic growth rate this year—targeted at 7.5 percent by the new government.
“We are still optimistic about the implementation of the government action plan and the new policy framework. We are hopeful that the Cabs will provide us with budget support,” he added.
Treasury earlier announced that expenditure and net lending in the 2014/15 fiscal framework has been pegged at K693 billion out of which K181 billion is development expenditure.
The figure is K52.7 billion higher than the K640.3 billion revised budget as of December 2013.
It still remains to be known if such a planned fiscal framework will be upheld by the new Democratic Progressive Party (DPP) administration of President Peter Mutharika.
Newly appointed Finance Minister Goodall Gondwe said on Friday during his swearing in ceremony in Lilongwe that although Malawi depends on donors on a number of issues, priority now should be on self-reliance.
Mutharika also acknowledged during the same function that the economy currently is in state of dysfunctional and that it needs people of GoodallGondwe caliber to get it back on its feet.