EU hints at resuming aid to Malawi

European Union (EU) commissioner for development Adris Piebalgs says the EU is keen to resume its budgetary support to Malawi as quickly as possible if critical issues of concern are resolved.

Speaking after meeting President Peter Mutharika in New York on Tuesday on the sidelines of the Climate Summit in the UN General Assembly Hall, Piebalgs, a Latvian politician and diplomat, said he had agreed with Mutharika to have a follow-up meeting over Cashgate and considerations for resumption of aid to Malawi in Washington with Minister of Finance, Economic Planning and Development Goodall Gondwe on a date to be named.

He said: “During that meeting, issues pertaining to Cashgate and resumption of budgetary support will be discussed in detail. As EU, we want to return to Malawi with budgetary support and we hope to resolve the issues as a quickly as possible.”

The Latvian politician said during the meeting, he and Mutharika also discussed finalisation of non-budgetary support amounting to about 600 million euros to cover a period of over seven years.

The EU and other donors suspended budgetary support to Malawi as a consequence of Cashgate, coined after the Watergate in the USA in 1971, after the attempted murder of former Ministry of Finance budget director Paul Mphwiyo led to the discovery of looting of public resources.

The donors have since November 2013 been withholding budgetary support amounting to $150 million after revelations of Cashgate during the administration of former president Joyce Banda and People’s Party (PP) who lost in the May 20 Tripartite Elections.

On his part, Mutharika said he told the EU commissioner that his administration has done everything worth justifying the need for donor nations to resume aid to Malawi.

“We believe we have met their conditions and we think they need to reconsider their position,” said Mutharika, expressing willingness to do more should the donors clarify on what remains to be done.

According to Mutharika, his administration has addressed the concern regarding the need to cut back on public spending and using State resources prudently.

“We believe we have scored well on this one because not only has wastefulness been eliminated but resources are being spent wisely and prudently,” said Mutharika.

He added that government is also dealing with Cashgate issues resolutely, by expanding the circle of criminal investigations and prosecutions, shifting around personnel and increasing resources in law enforcement agencies and accountability institutions.

Said Mutharika: “We have made our case that we only inherited this problem and we should not be punished as if we are the ones who caused it. We have done everything that a responsible government should do and we have the hope that there is light at the end of the tunnel.”

Asked about the indications he got from the EU envoy, Mutharika said: “Diplomats are never precise as you know. But we are ready to take this dialogue to the extent where all the problems are resolved and aid resumes.”

Donors finance up to 40 percent of Malawi’s recurrent budget and 80 percent of the development budget. The donor budgetary support freeze has prompted the new administration to work out a zero-aid budget of K742 billion with a K107 billion deficit.

—GEDION MUNTHALI is covering UNGA in New York, USA