Donors hang Malawi, Cabs to postpone key meeting

The door may have closed for Malawi to convince donors to release withheld budgetary support this financial year after government failed to meet agreed performance targets that were up for review at a meeting scheduled forTuesday in Lilongwe.

Because of Malawi’s poor performance on the targets, donors under the Common Approach to Budget Support (Cabs) have postponed the Extraordinary Performance Assessment Framework (E-PAF) review meeting.

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.

Government hoped to use the Cabs meeting to share with stakeholders the progress it has made in addressing weaknesses in public finance management so that development partners who had withheld their budget support could disburse and those that did not commit do so.

The contentious targets and indicators, which were the key agenda for the review meeting, were reached during the Cabs meeting in November 2013.

Although government released a statement yesterday in which it said the meeting was postponed to allow for more time for preparations, a high-level source in the Ministry of Finance confided in Nation on Sunday that donors are not satisfied with the progress Malawi has made on the indicators.

“Cabs members are trying to come up with a notice on the postponement of the meeting, but they are failing to agree on the language to be used in the notice,” said the source.

A senior and influential diplomat and Cabs member confirmed to Nation on Sunday yesterday that the meeting has been called off because government is not prepared with reports demonstrating progress on the E-PAF targets.

“There are still some outstanding things that were supposed to be done which were not done. Many other things have happened since our last meeting that need to be included and discussed during the meeting,” he said.

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

“The Malawi Government and the Delegation of the European Union in Malawi, which is the current chair of the Common Approach to Budget Support (Cabs) Group, wish to inform all stakeholders that the second 2013/14 Cabs review, which was scheduled to take place on 11th March 2014, at the Bingu International Conference Centre, has been postponed to a later date to be communicated.

“The decision to postpone the Cabs review has been mutually agreed between the two parties in order to allow for more time for preparations to ensure a successful meeting.

“Government and the Cabs Group wish to assure all stakeholders that the 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,” reads the statement.

Minister of Finance Maxwell Mkwezalamba and government spokesperson Brown Mpinganjira could not be reached to comment on the assertion that government failed to meet performance targets.

According to the E-PAF, some of the indicators and targets are the need for 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.

In addition, donors 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.

On the other hand, donors agreed to meet their commitments under JFA and to ensure that all ongoing government reform programmes are consistent in their phasing and intentions and are mutually reinforcing.

In a posting on the Ministry of Finance website on January 22 2014, government said the review meeting would give Malawi, donors and other stakeholders an opportunity to debate the achievements made in strengthening public finance management systems.

Government said the review meeting would come at a critical time when the Executive Board of the International Monetary Fund (IMF) had just approved the third and forth reviews of the Extended Credit Facility (ECF) which Malawi is implementing.

In mid-January this year, the IMF released a long delayed $20 million (around K9 billion) under ECF that many earlier feared was threatened by the toxic cashgate.

The disbursement—which came four months after cashgate broke out and following consequent aid suspensions by key donors—was seen as an important green light beckoning reticent donors under Cabs to return with their money.

When he announced the IMF package in January, Mkwezalamba said he was optimistic that the fund’s decision would unlock aid from Cabs after the March 11 2014 meeting that is now cancelled.

He also said at the time that Malawi expected the World Bank to release $50 million (K21 billion), the European Union to release 23 million euros and African Development Bank about $10 million (K4.2 billion).

But these resources may now be in jeopardy.

National secretary of the Catholic Commission for Justice and Peace (CCJP) Chris Chisoni 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.

“If the MRA approach is to be followed, the pressure has a negative impact on the private sector as it will be over-demanded in tax payment,” said Chisoni.