Malawi’s donors fault Zero Deficit Budget

Development partners under the Common Approach to Budgetary Support (CABS) on Monday faulted the previous government’s Zero Deficit Budget (ZDB) for the country’s economic downturn.

Speaking at the first CABS review meeting in Lilongwe, Norwegian Ambassador Asbjorn Eidhammer, who is CABS co- Chair blamed the previous administration for the difficulty times that Malawians were going through as they mismanaged the country’s economy.

Norwegian Ambassador speaks during the CABS meeting as Finance Minister Dr. ken Lipenga listens – Pic By Solister Mogha.

“It should be made abundantly clear that the responsibilities of the difficulties we are facing today are as a result of the previous administration that over a lengthy time mismanaged the country’s economy,” Eidhammer said, adding that Malawi was not yet ready to stand on its own.

Eihammer said the zero the ZDB increased the budget deficit enormously and it brought shortage of goods and foreign currency. He said the failure by the previous government to take decisive action contributed to a standstill in economic and business activities.

“We are aware of the difficulty that Malawi is going through, with inflation eating into the standard of living of most Malawians. This is, unfortunately, part of the necessary economic adjustment,” he said.

Eihammer applauded President Joyce Banda for taking bold decisions in addressing the microeconomic imbalances that were caused by both the international and internal economic factors.

He cited the devaluation of the kwacha, adoption of the exchange rate and elimination of the foreign exchange restrictions on private transactions as some of the correct decisions that had assisted in bringing the economy back on track.

CABS then assured Malawi of donor support as the country struggled to revamp its economy.

“We would like to reiterate our full support and commitment to help the country in the difficult times it is going through,” he said.

Finance Minister, Dr. Ken Lipenga said considering that the economy of the country was off track, the president decided to take a radical departure from the policies of the previous government.

He said implementing some of the economic reforms such as the devaluation of the kwacha were the rightful decisions in harnessing challenges the country was going through.

Lipenga said despite the hardships that this may have caused on ordinary Malawians, things would get to normal anytime soon.

“Government recognizes the economic challenges that Malawians are facing, and it is doing everything humanly possible to ensure that the economy bounces back and the challenges facing Malawians today are dealt with,” he explained.

On the CBAS review meeting, both Lipenga and Eihammer said it would be an opportunity for government and development partners to examine in detail weaknesses and shortcomings and try to correct them.

Lipenga said over the years, assessment had been conducted with focus on government performance without necessary looking on the other side. He said the meeting would therefore consider revising the original intention of the CABS arrangement.

“During this meeting, we shall present a list of issues that needs to be relooked at and taken into account by our development partners,” Lipenga said.

According to the joint framework for budget support, which dates back to May 2005, the review meeting will focus on the 2012/13 annual budget and its impact on poverty reduction, public finance management as well doing a preliminary assessment of fiscal performance of the previous financial year.

The meeting will also discuss the performance Assessment Framework (PAF).

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