Economists warn of tough times for Malawians as donors maintain aid freeze

Economic analysts are predicting tough times ahead for Malawians as the donors under the Common Approach to Budgetary Support (CABS) maintain withholding their direct budgetary support to the country until they see “real commitment from the government in addressing the Capital Hill financial scandal” known as the cashgate.

CABS co-chair also head of DFID mission in Malawi, Sara Sanyahumbi said during the recent meeting to review the government’s action plan on scandal,  that government should not to be complacent in addressing implications of the looting  because “ once confidence is lost, restoring it takes time”.

This was contrary to Finance Minister Dr Maxwell Mkwezalamba optimism that the progress on the ongoing investigations into the scandal is slowly making the donors regain the lost donor confidence which would eventually make them rescind their decision.

Sanyahumbi said while the government is doing fine it will still take time to restore the confidence saying the decision whether to restore budget support to the country will be determined at the next CABS meeting slated for March next year.

Maxwell Mkwezalamba- Malawi finance Minister
Maxwell Mkwezalamba- Malawi finance Minister

The CABS is withholding US$150 m for the second quarter of the 2013/2014 national budget.

However an economist Chikavu Nyireda told a local radio on Sunday that the development will eventually lead to souring increase in prices of goods as there will be no adequate foreign exchange for imports.

He advised the government authorities to stick the measures it put in place to mitigate the impact.

“What the government can do now is to ensure that fiscal discipline is being maintained and the measures that the ministry of finance put in place or suggested should be followed to the fullest,” he said.

Meanwhile, Malawi police have confiscated 19 vehicles and several houses suspected to have been bought using the stolen money.

Reports say among the confiscated vehicles are two cars and six buses which belong to the Chief Tourism Officer, Leonard Kalonga.

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