IMF advises Malawi to be tough on public funds management

“We take these issues seriously.”

Malawi needs to toughen and tighten its noose on its public funds management system gaps in order to forge a sound economic and finance apparatus devoid of abuse, The international Monetary Fund (IMF) has said.

The IMF, which is Malawi’s third largest multilateral lender after the World Bank through the International Development Association (IDA) and the African Development Fund (ADF) provided $193 million (approximately K151 billion) last year to help the country to meet its balance of payment, has made the call to Malawi government in light of the recent K6.2 billion Covid-19 funds audit report, which revealed serious gross mismanagement of public resources.

According to the IMF, the first disbursement of $91 million (about K71 billion) was approved in May 2020 under the Rapid Credit Facility (RCF) while a second tranche worth $101.96 (about K80 billion) was approved in October 2020.

IMF Representative – closely following Covid-19 plunder

The international lending institution, the IMF, however, says it is concerned with how the K6.2 billion Covid-19 funds were handled and called on the Chakwera administration to close all the gaps so there is no room for abuse of public funds.

According to the IMF, additional financing was to to help fill the resulting increased external financing gap while providing the fiscal space needed to address critical spending needs amid the pandemic and soon after the funds were disbursed, government committed to ensuring transparency and accountability as a well as as appropriate use of the RCF resources.

Reacting to the K6.2 billion covid-19 plunder, IMF Country Representative for Malawi, Farai Gwenhamo said:

“As IMF, we are closely following the situation as regards to how the Malawi government is undertaking its business in its bid to uncover how the Covid-19 funds were used and abused and what measures are being taken to correct the anomalies.

“The issues of transparency and accountability are critical in relation to the management of the Covid-19 emergency funds and management of public finances in general. We, at IMF, take issues such as these with ultimate seriousness.”

The IMF boss, Gwenhamo stressed that the audit findings point to the need for the country to focus on strengthening public finance management systems including public procurement, budget transparency, reporting and audits.

Gwenhamo said: “Such issues will be prioritised in their engagements with the Malawian authorities. Given that all RCF emergency financing resources were disbursed upfront, the focus is more on the forward looking elements which will require the authorities to tightly focus on closing loopholes through transparency and accountability. The IMF will support the authorities’ efforts.”

Gwenhamo further said that the IMF had not received any reports from Malawi Government on how it had utilised the $193 million resources adding that this is contrary to a commitment government made before IMF managing director Kristalina Georgieva in a Letter of Intent dated September 24 2020, co-signed by Finance Minister Felix Mlusu and Reserve Bank of Malawi.

“While continuing to implement the measures outlined in our April 27 2020 Letter of Intent, we reiterate our strong commitment to an effective and transparent use of public funds, and to ensure that the aid received, including from the RCF disbursement…are efficiently spent on addressing the crisis. Specifically, we are regularly publishing procurement documentation—including tenders, bids, and names of awarded companies, products or services procured and their costs, and names of the beneficial owners of the awarded companies—on the Public Procurement and Disposal of Assets (PPDA) website,” reads the letter in part.

The letter adds: “To ensure enhanced transparency and accountability, we are also publishing on the PPDA website the results of ex-post validation of delivery on a contract-by-contract basis; we will publish (on the Ministry of Finance website and in the press) quarterly statements on commitments and payments of Covid-19 related activities (in all MDAs, within 90 days after the end of each quarter.”

Malawi government treasury spokesperson, Williams Banda, said: “We explained to the IMF why the audits delayed. We fully agree with them on issues of transparency and accountability.”

He said: “I was, actually, surprised that government was making such promises in the letter of Intent when in its day-to-day

Apart from IMF, Malawi also received support from other development partners, including the World Bank, Unicef and the African Development Bank to support the national response plan on Covid-19.

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MCP Diehard
MCP Diehard
16 days ago

Gladys Chingaipe, Tightening of the noose is a reference to hanging by the neck. Your reference to the tightening of the noose is misplaced. Tightening of the noose is never a good thing for anyone. Tightening belt is probably what you were trying to say.

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