Reserve Bank of Malawi (RBM) Governor Charles Chuka has described cashgate as ‘too serious’ a warning that the cost of the scandal could be too heavy on Malawi.
The RBM boss has since admitted that in the wake of the recent revelation of massive public funds abuse, the country is being viewed as ‘a country without systems’ on the global scene.
“The matter at hand [cashgate] is too serious. The cost of cash gate scandal will not be just be in terms of the services that should have been provided to the people, it is going to be beyond that. The country as we are standing today, is actually viewed as a country that has no systems,” Chuka said on Friday.
He was speaking when he appeared before the inquisitive Public Accounts Committee (PAC) of Parliament to clarify the role of the central bank on the infamous cash gate that has seen the International Monetary Fund (IMF) describing it as a ‘crisis situation.’
The uncovered massive looting of tax payers’ money at Capital Hill has also forced the country’s key donors sitting under the Common Approach to Budgetary Support (Cabs) to withhold budget support worth $150 million (over K60 billion).
Chuka also informed Pac members that at it stands now, commercial banks and the private sector cannot get credit lines from external sources.
He added: “Banks and the private sector cannot get credit lines now. Indeed the Reserve Bank of Malawi, because of the manner in which these matters have gone, has paid the price in trying to contain the situation as RBM.”
“The cost to the nation is bigger, much, much bigger. Therefore, as I look forward to the next few months, the cost that we are going we are going to incur, will never be fully accounted for.
“Had it not been because the donors pulled out, I could have been standing here to assure this committee that this country is on track, and that by next year, we should have low interest rates, low inflation rate and stable exchange rate,” he said.
Chuka explained that RBM is pleased that PAC is doing what it can to make sure that the country gets to the bottom of the matter so that the country at least can begin to move again as a well organised, rule of law-based country as it has been in the past.
He said it was true that RBM holds government revenues, holds government donor flows and that all the money that comes to government of Malawi first reaches RBM.
Chuka said as a banker to government, RBM is a holder of government purse and that purse is very safe in their hands.
The RBM boss further said the central bank has been resisting from commenting on cashgate in public despite the bashing it was getting.
He further explained that the media coverage of these proceedings have had an impact but said the RBM board still felt that I should not get involved to go public in commenting on the issue.
“My job is to create some kind of confidence in this economy to the general public that we can do some things to stabilise the economy given the instruments and powers that we have. If it wasn’t for this scandal and donor pull out, the economy was in good step,” said Chuka.
During the Pac meeting, Member of Parliament Henry Mussa wondered why Chuka was being quoted in the papers as saying the economy was on track when at the same time billions of kwacha were being siphoned from the public purse.
The Bankers Association of Malawi (BAM) vice -president Misheck Esau could not pick-up his phone yesterday when Business News wanted to verify claims by Chuka that banks cannot get lines of credit from other external sources.
