Donor money start to pour in: EU gives Malawi K18b grant

Just after Malawi has passed the International Monetary Fund (IMF) test, the  European Union (EU)  has given Malawi  K18 billion grant on Monday, November 25 2019 to support its Public Finance Management reforms dubbed ‘Chuma cha Dziko’ Programme.

In the wake of revelations of the plunder of public resources at Capital Hill, known as Cashgate, exposed in October 2013, donors suspended direct budget support to Malawi.

Instead, the donors channelled their assistance through some international non-governmental organisations.

Now there is a flicker of hope that donors will be giving Malawi budget support owning to the confidence shown by IMF.

Speaking during the signing ceremony of the grant between Malawi and European Union took place in Lilongwe, Minister of Finance Economic planning and Development Joseph Mwanamvekha among many things thanked EU and assured its Ambassador to Malawi, Sandra Paesen that the money would be put to proper use.

Mwanamvekha said the five-year programme will cost EURO 22.0 million (more than K17.7 billion) out of which EURO 8.7 million (K7.08 billion) is for technical assistance.

“The programme will achieve efficient and effective use of public resources to contribute to the growth of Malawi’s economy and development.

“It is set to improve tax administration through interventions in revenue policy and tax administration to increase fiscal space for financing inclusive growth and development,” Mwanamvekha said.

Mwanamvekha also said  it will help save more money in government that has been lost due to poor public finance management such as in procurement, contract management  and payroll, among other things.

EU Ambassador and Head of delegation to Malawi, Sandra Paesen said the programme will focus on public procurement and contract management, payroll and pension management, commitment control and debt management, parastatal financial management and oversight.

“Government institutions will be involved in its implementation, including the Treasury, the Accountant General’s Department, Public Procurement and Asset Disposal Authority, Office of the President and Cabinet and Department of Human Resources Management and Development,” she said.

She pointed out that under technical assistance, government will engage experts in the implementation of the Programme over the next five years.

“The programme will address key constraints to growth, namely corruption and under collection of tax revenues which will ensure accountability and transparency in the use of public resources,” she added.

The EU Ambassador further said the programme will create space for participation of the public, including Civil Society Organisations and media. This is also in line with the Malawi Growth and Development Strategy III (MGDS III) direction, particularly on good governance.

The development comes after  IMF Executive Board of Directors, sitting in Washington D.C,  Friday approved resources amounting to $40 million (about K29 billion) to support Malawi’s reconstruction efforts in the aftermath of the devastating cyclone Idai.

The Board also met to complete the second and third reviews of the three-year Extended Credit Facility (ECF) programme with Malawi, an arrangement which is worth $112.3 million (about K83.1 billion).

Mwanamvekha said the decision by IMF is a clear signal by the fund “of their faith in Malawi government’s economic management”.

He said the approval by IMF has come at a time when “government and the people of Malawi are focused on a growth path to take advantage of the macroeconomic stability that continue to prevail in this country.”

The Finance Minister said following the IMF approval, Capital Hill and Malawians expect “without doubt” that such a decision will have a strong signaling effect to other donors to resume budget support to Malawi.