Donors yet to trust govt financial system

Head of Britain’s Department for International Development (DfID), Jen Marshall, yesterday defended the recent increase in off-budget support by Malawi’s development partners in the 2015/16 National Budget rolled out on July 1.

Marshall, speaking during the High-level Forum on Development Effectiveness in Lilongwe, said there is still a lack of trust in government financial systems at the moment; hence, a “mix of instruments” in supporting Malawi.

She said: “With lack of trust in government financial systems at the moment, this mix now includes higher levels of off-budget support.”

Off-budget support, according to Marshall, does not use government financial systems though it does use other government systems.

Given the recent debate in Parliament, Marshall clarified that off-budget support does not necessarily mean “off-national priority” nor does it mean operating without any form of agreement with government at central, sector or district levels.

“DP [development partner] alignment continues behind activities and objectives in the national development, sector plans, ministry strategic plans, national reform plans and district development plans,” she said on behalf of other DPs during the meeting.

Marshall, whose institution is current chairperson of DPs’ Troika, said it was important to note the sheer scale at which off-budget support delivers national priorities such as towards procuring essential drugs, HIV and Aids treatment, construction of schools and clinics, child care centres, social assistance and support to small and medium businesses.

According to Marshall, what is shared by all Malawi’s DPs is the commitment to principles of good donorship as referred in the Paris Declaration on Aid Effectiveness, Accra Agenda for Action and Bussan agreement.

Commenting on the ongoing public sector reforms, Marshall said during its first year, the Peter Mutharika administration has launched important reforms and actions to tackle corruption and for greater efficiency and effectiveness in the public sector.

Marshall reiterated that implementation of reforms is critical for donor confidence in national systems.

Minister of Finance, Economic Planning and Development Goodall Gondwe said when he presented the 2015/16 budget that although direct donor contribution to the budget is declining it was pleasing that off-budget donor support has been rising in money terms.

But the minister said the upward trend in off-budget support as a major source of financing the delivery of public goods and services is not without problems.

Malawi has been operating without budget support from its DPs since 2013 when donors withheld their funding following revelations of the plunder of public resources at Capital Hill which British forensic auditors, Baker Tilly, established to be K24 billion between April and September 2013.

Further eroding confidence in government systems is the PricewaterhouseCoopers (PwC) report from the examination of public finances from January 1 2009 to December 31 2014 released roughly three weeks ago, which found that at least K577 billion—around 30 percent of total expenditure during the five-year period—was not accounted for.

PwC is now expected to carry out a forensic audit of the dubious transactions.