Despite the International Monetary Fund (IMF) showing confidence with the Joyce Banda administration with a $20 million loan approval, the British government says it will continue to freeze its aid until government restores confidence fully.
In an official response from British High Commission and Department for International Department (DfID) in reaction to IMF’s decision, the UK, one of Malawi’s largest bilateral donors, says it will not resume aid until it is sure that its funds will be secure.
Yesterday, the Common Approach to Budget Support (Cabs) also said their members will conduct their own review in March; hence, the aid remains frozen.
“The UK does have a number of sectoral programmes that were financed through government financial systems and these programmes will continue to be frozen, or alternative delivery mechanisms found, until we have confidence that the funds will be secure and used for their intended purpose,” reads part of the response from the High Commission .
The UK also advised government to put in place that financial control measures that would start producing results after cashgate.
“The cashgate investigations are still ongoing and new financial control measures have yet to bed in. The key to building confidence is a record of sustained implementation that demonstrates a changed culture towards issues of fraud, corruption and inadequate financial management control.
“We believe that more needs to be done. We strongly agree with the IMF statement which underlined that to restore confidence the government will need to investigate the cashgate fraud thoroughly and to fully implement its action plan to address the weaknesses in public financial management exposed by the fraud. While there has been some progress, it is too early to judge the impact.”
Council for Non-Governmental Organisation in Malawi (Congoma) chairperson Voice Mhone also agreed that government needs to do a lot to ensure there is no repeat of cashgate.
“The cashgate came because the Ifmis [Integrated Financial Management System] we were using was porous. How sure is the IMF that the reintroduced Ifmis does not have loopholes which might result into another cashgate? We feel that much as the disbursement was welcome, there was a lot that needed to be done before starting disbursement of funds,” said Mhone.