The International Monetary Fund (IMF) says it expects the resumption of withheld donor budget support funds to Malawi before end of June 2014 if the implementation of the Government Action Plan on cashgate continues at the current pace.
“If implementation of the action plan continues at the current pace, we would expect restoration of some, though not all, of the suspended donor financing by end-June 2014,” said IMF country representative Geoffrey Oestreicher in an exclusive e-mail interview with The Nation on Sunday.
He observed that the suspension of budget support has left “a residual” fiscal financing gap to be filled with some expenditure cuts and a small amount of additional domestic borrowing.
Malawi’s major donors under the banner of the Common Approach to Budget Support (Cabs) are currently withholding budget support worth $150 million (about K60 billion) towards the 2013/14 national budget following the revelation of massive plunder of public funds at Capital Hill, widely referred to as Capital Hill cashgate.
However, Oestreicher expressed satisfaction over progress the Malawi Government has made towards addressing cashgate, saying the Integrated Financial Management Information Systems (Ifmis) is now back online, but with much improved security and operational integrity.
He said: “The government has consolidated its response to the cashgate incident in a comprehensive action plan. The IMF has been following the design and implementation of this plan since its inception, and considers it to be a well thought-out and comprehensive approach to the situation facing Malawi today. Significant progress has already been achieved.”
Oestreicher noted that currently accountability is being vigorously pursued, both through investigations and prosecutions of those responsible for the fraud, and also through an ongoing forensic audit of transactions.
He also said IMF is pleased with transparency on the part of the government in the progress to address cashgate through weekly press conferences to report progress, and meetings with civil society and donors.
He advised the public to remain aware of the efforts being made by government and the international community to effect recovery from cashgate.
The third and fourth reviews of the Extended Credit Facility (ECF) programme are scheduled for discussion by the IMF’s Executive Board in January 2014.
Reacting to the IMF stance, Minister of Finance Maxwell Mkwezalamba said government also expects that once the IMF goes to the board next month, some Cabs donors will likely resume their budget support to Malawi.
“However, we have to wait for the Cabs meeting planned for March [2014] and I am confident that the outcome review meeting will be positive and we should see budget support coming in,” said Mkwezalamba.
