Donors withhold $150m, demand revised national budget

Donors under the Common Approach to Budgetary Support (Cabs) on Thursday said they are withholding their assistance estimated at $150 million (about K60 billion) to Malawi for the October to December 2013 quarter after being disappointed with revelations of the plunder of public resources at Capital Hill.

The donors have also asked government to produce revised national budget to take into account their withheld resources, Minister of Finance Maxwell Mkwezalamba said on Thursday.

Cabs donors said disbursement of budgetary and sector support will be delayed until corrective measures are taken by the Malawi Government.

The donors expressed their sentiments during their first quarterly review meeting of the 2013/14 financial year with government in Lilongwe on Thursday amid revelations that billions of kwacha have been siphoned out of the government system.

Speaking during a press conference after the meeting, Cabs chairperson Sarah Sanyahumbi said before reopening their aid taps, donors, who contribute about 40 percent to the national budget, will, over a period of time test the Integrated Finance Management Information System (Ifmis), the government accounting system blamed for the pilferage.

She said: “If we can come back with support in a few months’ time, certainly from the United Kingdom side, it will not look the same.”

Delivering an emotive address during the opening of the meeting earlier, Sanyahumbi said trust and confidence between the donors and government was lost and that it would take time to rebuild.

She said: “We have spent considerable time and money on various reform programmes and capacity building over the years. What do we have to show for it? Systems at all levels failing the people of Malawi; abuse of those systems stealing from the people of Malawi.

“As far as we are concerned, the line has been crossed, once that line has been crossed, you cannot go back to what you had before.”

Sanyahumbi added that with concerns from donors about the financial systems which were systematically abused and allowed cash-gate to happen, donors “cannot responsibly continue to put money into the government system”.

However, Sanyahumbi assured that social programmes which are donor-funded through other means such as health, education and food security would not be affected by the delay in donor funds disbursements.

In his debut remarks at a Cabs review meeting, Mkwezalamba described the looting of government resources as deplorable and appealed for help to root out the problem.

He said despite the developments at Capital Hill, government would remain committed to the fundamental principles of budget support which are sound public financial management, accountability and effective anti-corruption measures.

Cabs membership include Britain, the United States of America, the European Union, Germany, Flemish Government, Norway, Belgium and the African Development Bank (AfDB).