Germany ‘pulls out’ of Cabs
The Federal Republic of Germany yesterday announced a change in its membership status within the Common Approach to Budget Support (Cabs) to that of an observer.
This means that Germany—a long time development partner for Malawi since independence in 1964—will no longer provide budget support for Malawi in the subsequent national budgets, according to a source at Ministry of Finance who confided in The Nation yesterday.
The current Cabs group members are the African Development Bank, Britain’s Department for International Development (DfID), the European Union (EU), Norway and the World Bank with the International Monetary Fund (IMF), United Nations Development Programme (UNDP), Ireland and, now, Germany having the status of ‘observers’
“This decision has been taken on the basis of an in-depth analysis of the general budget support as an effective instrument of Germany’s bilateral development cooperation with Malawi,” stressed German Ambassador Peter Woeste in a statement issued yesterday.
In 2011, Germany froze its general budget support to Malawi, but supported the country twice through disbursement of emergency budget support during the period.
Germany’s change in membership status within Cabs comes amid continued withholding of budget support by Cabs members towards the 2013/14 budget following revelations of plunder of public resources at Capital Hill which was exposed following the shooting of the then Ministry of Finance budget director Paul Mphwiyo as he entered the gate of his Area 43 residence in Lilongwe on September 13 last year.
About $150 million (over K60 billion) is still withheld by Cabs members as budget support—which in essence helps Malawi cushion its Balance of Payments (BoP) position and beefs up the country’s foreign exchange reserve position.
Said Woeste: “Germany is committed to continue supporting the people of Malawi on their path to sustainable development; it is just that we are exploring alternative ways how best to achieve this goal.”
Minister of Finance Maxwell Mkwezalamba yesterday pleaded for more time before responding to the decision by Germany to re-position itself within Cabs saying: “I can’t answer now because I will be busy with meetings up until five o’clock.”
Malawi Economic Justice Network (Mejn) executive director Dalitso Kubalasa yesterday described the decision by Germany as “quite an interesting development, to say the least”, saying it shows that there could be more reasons behind such a decision.
