Malawi Finance Minister Dr Maxwell Mkwezalamaba has announced tough austerity measurers to control public coffers following donors’ decision to freeze aid to the country as reaction to the cash-gate – a coinage that has surfaced as a result of plundering of government resources at Capitol Hill.
Mkwezalamba – former financial technocrat at the African Union (AU) now Malawi minister – made the revelation in Malawi’s capital Lilongwe Wednesday which includes President Joyce Banda to cut down on both her internal and external travels.
“With the stance taken by our donor partners it is very likely that we will have a deficit in our planned expenditure so in view of our shortfall in revenue we have to be mindful in the way we use the resources that are at our disposal,” said Mkwezalamba.
The Finance Minister said the measures will also affect all government officials.
“We’ll only allow critical travels which will be sanctioned by the Chief Secretary or those that are fully funded by organizers,” said Mkwezalamba at a news conference.
He added: “Only three people will be allowed to make a ministerial delegation and each ministry will be allowed to have three pool vehicles to cut on fuel and other costs.”
The Finance Minister, however, brushed off fears that government will introduce new taxes to keep up with their finances or borrow from local banks.
“That [especially borrowing from local banks] will have serious repercussions on the economy as this will prompt the increase in interest rates,” he said.
Foreign donors have withheld budget aid to Malawi until government gets serious about rooting out widespread corruption and restoring fiscal discipline.
“We will not be able to resume support through government systems until we have a clear assurance, independently verified, that our resources are all being used for their intended purpose,” said Sara Sanyahumbi, who heads the donor grouping which includes European countries, the European Union and the World Bank.
“Now is the time for the government to take the initiative, take the action that is needed to address the weaknesses in the systems,” she added.
Malawi last month arrested two public officials for embezzling $15 million from public coffers, the latest in a string of graft cases that have raised the ire of the international donor community.
Dubbed cash-gate, the scandal prompted President Banda to fire her entire cabinet, while Norway suspended its budget aid to the country.
Banda’s actions have elicited death threats, and a Treasury Budget Director official Paul Mphwiyo was shot and wounded outside his house in September.
The plunder of state funds had “seriously dented the confidence in the government’s financial management system,” said Sanyahumbi, who is also the country head of Britain’s Department for International Development (DfID).
At a review meeting in the capital Lilongwe, Sanyahumbi said that despite years of donor support “all there was to show for it were systems failing the people of Malawi at all levels.”
“We see it very clearly as the government’s responsibility to tackle these issues,” she added.
Donors are not scheduled to disburse pledged aid until next February following an IMF review, but they warned last Thursday that the next aid tranche depends on government efforts to fight the rampant corruption.
The grouping has pledged up to $150 million to Malawi this year.
The impoverished southern African nation, one of the world’s poorest, relies on donors for 40 percent of the state budget.Follow and Subscribe Nyasa TV :