Economist says Malawi should brace for tough times

An economic expert say Malawians should brace for tough times following the donors postponement of a review meeting with the government over the suspended financial aid.

Donors under the Common Approach to Budgetary Support (CABS) has announced the postponement “to a later date” of the scheduled series of meetings this month to monitor the country’s progress in implementing fiscal policies to ensure that public funds are utilized properly.

The postponement of CABS meeting comes after government failed to meet agreed performance targets that were up for review at a meeting scheduled for Tuesday in Lilongwe.

Chisoni: Pressure will be on MRA
Chisoni: Pressure will be on MRA

The postponement of the meeting dims the prospects of donors resuming budgetary support suspended following the plunder of government resources that has cost Malawi $150 million (about K63 billion) in withheld aid.

Economics lecturer at the Livingstonia University, Colleen Kalua says the development would likely adverse impact on Malawians.

Kalua said the country’s health system which gets 90% of its financial resources from donors is likely to be affected by the continued aid suspension.

National secretary of the Catholic Commission for Justice and Peace (CCJP) Chris Chisoni also said the postponement of the review meeting could mean increasing pressure on the Malawi Revenue Authority (MRA) to collect more taxes or government would have to borrow from domestic or international financial institutions.

EU Head of delegation to Malawi and CABS member, Alexander Baum earlier told a local radio, Capital FM   that the group will only lift its suspension on budgetary support if they  will be “satisfied with the outcome of investigations” into the scam.

Malawi government said  in  statement that the decision to postpone the meeting was jointly reached with the European Union delegation to Malawi which is the current Cabs chair.

Government assured that he second Cabs review for the 2013/14 fiscal year will still be held within this financial year in accordance with the Joint Framework Agreement (JFA) that governs the partnership,

Observers view the postponement of the discussion as a clear sign that the donor community is not pleased with the strides the President Joyce Banda’s administration  has made so far.

It is also strongly believed that the donors want to release the funding after May elections when the new government will be ushered into power.

The donors want government to obtain a full understanding of the scope and extent of the misappropriation of funds from the Accountant General’s Department, strengthening the security, internal controls and functionality of the porous Integrated Financial Management Information System (Ifmis) and restoring a robust payments system.

They have also asked government to demonstrate commitment to undertaking comprehensive and robust action on public service performance management problems, strengthen public accountability as well as achieve and sustain macro-economic stability.

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