Malawi donors stick to their guns: ‘We won’t tow IMF line’

Members of the Common Approach to Budgetary Support (CABS) a grouping of Malawi’s donors who withheld aid last year due to looting of billions of public funds from government coffers in what is known as Cashgate scandal, are maintaining that they will not be lured by the IMF’s approval of credit facility to resume funding.

The IMF had suspended its disbursement of about $20 million funding to Malawi under the Extended Credit Facility or ECF last October pending investigations into Cashgate scandal but reversed  the decision last Friday.

IMF said it had injected the funds because “Malawi’s macroeconomic performance under the IMF-supported program has remained broadly satisfactory and that the policy reforms initiated in May 2012 are showing positive results”.

EU Ambassador Baum: We want to see objective tackling of cashgate

EU Ambassador Baum: We want to see objective tackling of cashgate

The global lender however acknowledged that the recent fraud and misappropriation of substantial amounts of public funds and the associated loss of programmed financial aid has negatively affected the macroeconomic outlook.

Finance Minister Maxwell Mkwezalamba told journalists at a news conference in Blantyre that the IMF move would influence development partners into resuming direct budgetary support to the country.

“This is a green light to our development partners to continue assisting us. And this becomes particularly important for the CABS, the Common Approach to Budgetary Support that had decided to delay the disbursement of budget support on the account of the looting on government resources, so there is already indication that the CABS group will come forward to support Malawi,” he said.

However,  member of the CABS group, Alexander Baum, who also heads the European Union delegation to Malawi, told a privately owned Capital Radio that the group will only lift its suspension on budgetary support if they will be “satisfied with the outcome of investigations” into the Capitol Hill financial scam.

Baum said the donors still want to see financial prudence being exercised by the government.

Malawi’s renowned social and economic commentator Mabvuto Bamusi earlier told The Voice of America that although CABS group normally gets their signals from IMF which may force the group to relax its muscles, “it still remains uncertain whether some of the donors who had withheld aid would bound back just because IMF has done so.”

“I have this strongest sense that some of the individual members of the CABS will stick to their lines. Without doubt I think the Norwegians may still stick to their guns and I will be very, very surprised if the British will release their budget support because there are other related issues  [of concern] like the way the presidential jet was sold and a number of governance issues.”

Bamusi also said since Malawi expects to hold election in four months’ time, it is likely that many individual members of the CABS will take a wait and see approach.

According to the CABS co-chair Sara Sanyahumbi the group is expected to meet in March to decide whether they can unlock their budgetary support to Malawi.

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