Donor squeeze brings down ‘zero-deficit’ budget

The stubbornness of Malawi leadership is costing the country more with a new stand by the international donor community that they will never release funds unless President Bingu wa Mutharika overcomes political and economic hurdles.

This has clearly led to failure of Malawi’s saviour paper, the zero-deficit budget, as donors are not willing to release over US$500 million pledge aid.

The World Bank is concerned with threats to press freedom and what it terms ‘shrinking political space’ in reference to intolerance by the current leadership.

This is a blow to Malawi government, which in June this year, convinced the public that the country can be run and managed using locally generated revenue under what it termed a ‘zero-deficit budget.’

Lipenga: We are addressing non -economic issues. Photo: Times Group

The national budget at K304 billion was expected to be financed by taxes and government introduced new and increased some of the existing tax bands as a strategy to meet the 40 percent budgetary support given by donors.

According to World Bank country manager for Malawi Sandra Bloemekam , the current economic status is continuously raising Malawi’s profile in the international community in negative light.

Bloemekamp, the incumbent chairperson of Malawi’s Common Approach to Budgetary Support (Cabs) which comprises of the donor community, said the country’s international partners are highly concerned with lack of progress to have IMF programme back on track.

But in a clear sign of defeat and indication that the much-touted zero deficit budget is failing, Minister of Finance Ken Lipenga said he has noted the stand by donors and that government would fix all problems raised and find solution to the current challenges in the country.

“We are taking certain actions including enganging the IMF. As a government we have a responsibility to certain action. We know what needs to be done,” said Lipenga.

“We are also addressing certain non-economic issues, the issues that  are to do with governance,” he added.

This is not the first time government has acknowledged in its actions of the budget failure as recently President Mutharika separately dispatched high-powered delegations to Washington D.C and London to plead with the west so that Lilongwe should have its lifelines in foreign aid back.

On the other hand Malawi’s donors have firmly said they would not throw any penny in government coffers without the IMF programme and assurance that violence on innocent Malawians calling for human rights is assured.

The United States has even suspended its compact program which was supposed to finance upgrading of the country’s electricity sector valued at US$350 million.

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